JAMB Accounts Principles of Accounts 2018 Paper

Concept:The cost price method values goods at their actual cost when a uniform profit margin cannot be applied across all items.Explanation:The cost price method is best applied when goods attract different gross profit percentages.If all goods carried the same profit percentage, a simple selling price method could estimate the cost.But when margins vary, cost cannot be found using one common rate.Thus, each item must be valued on the basis of its individual cost price.Perishable nature, specific selling prices, or the aim of disclosing gross profit do not make this method applicable on their own.Answer:C. Goods attract different gross profit percentage.