All of the Following Are True of the Number of Days

question 129

Multiple Choice

All of the following are true of the number of days' sales uncollected ratio except:

• A)Is most effective in evaluating the cash sales of a company.
• B)Can be used for comparisons to other companies in the same industry.
• C)Can be used for comparisons between current and prior periods.
• D)Reflects the liquidity of receivables.
• E)Measures how much time is likely to pass before the current amount of accounts receivable is received in cash.

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Definitions:

Lower-of-Cost

A principle that dictates inventory should be recorded at either its original cost or the market value, whichever is lower, to avoid overstating assets.

Ending Inventory

The total value of all inventory that a company has in stock at the end of an accounting period.

Inventory Accounting

The process of valuing and tracking physical stock and its cost flow from purchase to sale, used to determine cost of goods sold and inventory balance.

FOB Destination

A shipping term indicating that the seller bears the freight charges and retains ownership of goods in transit until they are delivered to the buyer.