MANAGEMENT

BUISENESS MANAGEMENT

MERCHANDISING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
A business wants a compromise between net income and tax savings. It should choose the ____ method.
A
LIFO
B
FIFO
C
weighted average
D
gross profit
Explanation: 

Detailed explanation-1: -Which of the following is an advantage of the weighted average method? It makes large inventories with many small items easier to count repeatedly.

Detailed explanation-2: -How is the gross profit method different from the other three primary methods? It does not require exact cost amounts of individual units. It replaces the need to do physical inventory counts. It only requires an estimate rather than an exact calculation.

Detailed explanation-3: -The primary difference between a merchandising and a service-based business is the presence of inventory. Merchandising businesses sell goods to customer, whereas service-based businesses do not. The companies’ financial statements, including the income statements, must reflect this difference.

Detailed explanation-4: -The operating cycle of the merchandise company is longer than that of a service company. Operating cycle means the average days required by a company to manufacture or buy goods, sell and to earn cash from it and in case of a service company, the manufacturing time for the production of goods is not involved.

There is 1 question to complete.