Why would a company want to estimate its inventory?

(A) The company might physically count inventory only once a year, yet they might need to produce financial statements on a monthly basis

(B) Inventory is lost in a fire, and the claim for insurance requires the inventory amount lost

(C) As a test of the accuracy of an actual physical inventory count

(D) All of these

Answer (D): All of these

Explanation: Organizations now and again need to decide the worth of stock when an actual count is incomprehensible or illogical. For instance, an organization might have to realize how much stock was obliterated in a fire.

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