Which of the Following Statements Is Not True

question 68

Multiple Choice

Which of the following statements is not true?

• A) The receivables turnover ratio indicates the average number of times the company completes the selling and collecting cycle during the year.
• B) The days-to-collect measure is 365 days divided by the receivables turnover ratio.
• C) The receivables turnover ratio and days-to-collect measure move in opposite directions.
• D) A high receivables turnover ratio means a slower turnover.

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Definitions:

Periodic Inventory System

An inventory system that updates the count and valuation of stock at specific intervals, rather than continuously.

LIFO Method

An inventory costing method that assumes the last items placed in inventory are sold first, used for both inventory valuation and cost of goods sold calculation.

Cost of Goods Sold

Costs directly related to the fabrication of goods a business sells, incorporating both materials and labor.

LIFO Inventory Valuation

An inventory costing method that assumes the last items placed in inventory are the first ones sold.