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Calculator With the retail inventory method, how is the total beginning inventory value used in the...

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With the retail inventory method, how is the total beginning inventory value used in the calculation of the cost-to-retail ratio for the current period under the following cost flow assumptions?

FIFO Average Cost LIFO
I. Include Include Exclude
II. Include Exclude Exclude
III. Exclude Exclude Exclude
IV. Exclude Include Exclude
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Answer #1

Answer: Option iv) Exclude Include Exclude

Explanation:

The retail inventory method,the total beginning inventory value used in the calculation of the cost-to-retail ratio for the current period under the following cost flow assumption is "Exclude Include Exclude" First we use the FIFO to excluded the value which is first in the rule was first in first out. Then after step we use average cost method to Include the value, if there is any purchase in cost-to-retail. After step is included the LIFO for the excluded the value last-in-first out which is cos-to-retail inventory.

Therfore, retail inventory method,the total beginning inventory value used in the calculation of the cost-to-retail ratio for the current period under the following cost flow assumption is "Exclude Include Exclude".

Thus, option iv) is correct and remaining given options are incorrect.

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