The Denominator of the Days Payable Outstanding Ratio Can Be

question 51

Multiple Choice

The denominator of the days payable outstanding ratio can be

• A) average daily sales.
• B) average trade accounts payable.
• C) average daily cost of goods sold.
• D) average trade accounts receivable.

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Definitions:

Direct Method

A costing method that directly allocates service department costs to producing departments without apportioning them among the service departments themselves.

Support Departments

Units within an organization that provide essential services and support to the main production or operational departments but do not directly contribute to the primary business product or service.

Machining Department

A specific department within a manufacturing facility where machining processes such as cutting, drilling, or milling are performed on materials.

Activity-based Costing

A costing method that assigns overhead and indirect costs to specific activities, enhancing the accuracy of product costing.