A Method of Allocating Merchandise Costs That Assumes the Sales

question 14

True/False

A method of allocating merchandise costs that assumes the sales in the period were made from the most recently purchased merchandise and the earliest merchandise bought remain in inventory is called the first-in, first-out method.

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Definitions:

Accounts Receivable Turnover Ratio

A financial metric indicating how effectively a company extends credit and collects debts on that credit; calculated by dividing net credit sales by average accounts receivable.

Inventories

Quantities of goods, raw materials, work-in-progress, and finished products that a company holds for the purpose of sale or production.

Accounts Receivable Turnover Ratio

A financial metric assessing how efficiently a company collects its receivables, calculated as net credit sales divided by average accounts receivable.

Accounts Receivable Turnover Ratio

A financial ratio indicating how efficiently a company collects on owed credit sales over a period.