The Following Information Has Been Obtained on Alberta Drilling Company

question 26

Multiple Choice

The following information has been obtained on Alberta Drilling Company for 2022.

The inventory turnover and average day's sales in inventory for Alberta Drilling Company are:

• A)Inventory turnover: 67.59; Average days sales in inventory: 5.40 days
• B)Inventory turnover: 40.56; Average days sales in inventory: 9.00 days
• C)Inventory turnover: 9.00; Average days sales in inventory: 40.56 days
• D)Inventory turnover: 5.40; Average days sales in inventory: 67.59 days

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Definitions:

Retained Earnings

The portion of net income that is not distributed to shareholders but instead reinvested in the business or used to pay off debt.

Insurance Expense

The cost incurred by an entity to obtain insurance coverage, recognized as an expense over the period the insurance provides coverage.

Post-Closing Trial Balance

A list of all accounts and their balances after closing entries are made, used to check the balance of debits and credits.

Fees Earned

Income received from providing services, typically recorded when the service is rendered, not when the payment is received.