Explain about gross margin method, Accounting Basics

Assignment Help:

Q. Explain about Gross margin method?

The steps in computing ending inventory under the gross margin method are

- Estimate gross margin based on net sales using the similar gross margin rate experienced in prior accounting periods.

- Determine approximate cost of goods sold by deducting estimated gross margin from net sales.

- Determine approximate ending inventory by deducting estimated cost of goods sold from cost of goods available for sale.
Therefore the gross margin method estimates ending inventory by deducting estimated cost of goods sold from cost of goods available for sale.

The gross margin method presumes that a fairly stable relationship exists between gross margin and net sales. In other words gross margin has been a reasonably constant percentage of net sales and this relationship has continued into the current period. If this percentage relationship has changed the gross margin method doesn't yield satisfactory results.


Related Discussions:- Explain about gross margin method

Advance accounting theory, hi I was wondering you use provide the solution ...

hi I was wondering you use provide the solution of the back of the book for advance accounting theory by Craig Deegan 4 edition ISBN - 13: 978-007101314 - 7 ISBN - 10: 007101314

Accounting personnel, There is almost not, any organization that does not h...

There is almost not, any organization that does not have an accountant. His task is all pervasive and he is included in a broad range of activities, particularly in a huge and comp

Accrual method, Answer the following questions in 200 to 300 words: ...

Answer the following questions in 200 to 300 words: · Nonprofit organizations are required to produce financial statements based on the accrual method of accounting

Student, In Excel, I need help with formulas

In Excel, I need help with formulas

Explain about accrued assets, Q. Explain about Accrued assets? Accrued ...

Q. Explain about Accrued assets? Accrued assets are assets such like interest receivable or accounts receivable that haven't been recorded by the end of an accounting period. T

Retained earnings account, Closing entries perhaps prepared directly from t...

Closing entries perhaps prepared directly from the work sheet. The first journal entry debits all items appearing in the Income Statement credit column as well as credits Income Su

Trial balance help, when creating a trial balance, which account balances c...

when creating a trial balance, which account balances carry over from previous months

Career as an accounting professor, Do you enjoy college life? Do you enjoy ...

Do you enjoy college life? Do you enjoy teaching others? If therefore you might want to consider a career as a college professor. Even though a position as a college professor may

Jane has a $35, Jane has a $35,000 bank loan that she wishes to pay off in ...

Jane has a $35,000 bank loan that she wishes to pay off in five equal annual payments with 12% interest. If the first payment is due one year from today, what will be the amount

Credit - accounting entry, Credit -- an accounting entry on the bottom or r...

Credit -- an accounting entry on the bottom or right of a balance sheet. Generally an increase inliabilities or capital or a reduction in assets. Opposite of credit is debit. Every

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd