Inventory Turnover

question 47

Multiple Choice

Inventory turnover:

• A) is computed by dividing average inventory by cost of merchandise sold.
• B) measures the relationship between the volume of goods sold and amount of inventory carried.
• C) increases the risk of loss from damaged merchandise.
• D) is computed by dividing the beginning inventory plus the ending inventory by two.

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Definitions:

Premium

An additional amount over the normal cost, or the portion of insurance payments above the cost of the insured risk.

Discount

A reduction applied to the usual cost of goods or services, or in finance, an amount deducted from the face value of a bill of exchange or loan.

Par

The nominal or face value of a bond, stock, or coupon as indicated on a certificate or instrument.

Stockholders' Equity

The ownership stake of shareholders in a corporation's assets, remaining after all liabilities have been subtracted.