The Retail Method of Inventory.

Abstract The article presents a discussion on the Retail Method of Inventory. The purpose of this method is to provide a simple, practical control over the merchandising activities of a business. It may be called a modern method of accounting in the sense that its primary purpose is not to record what has happened, but to provide an effective control over what is going to happen. The basic idea is to gain control of the element of profit in an article at the time it is bought and to retain control until the profit is realized by the sale of the article. Another purpose of the Retail Method is to arrive at the true value of merchandise inventories. The two purposes mentioned are today generally regarded as the most important. It appears, however, that the Retail Method originated solely for the purpose of providing a perpetual book inventory. This it does, of course. In fact the simplicity of a running inventory record on the retail basis is alone a sufficient reason for using the retail method.