Permanent Accounts

question 128

Multiple Choice

Permanent accounts:

• A)are not permitted under GAAP.
• B)have their balances zeroed-out at the end of each accounting year.
• C)do not have their year-end balances carried into the next year.
• D)are Balance Sheet accounts.

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Definitions:

Days' Sales In Inventory

An indicator that reflects the average number of days a company requires to convert its inventory into sales.

Inventory Ratio

A financial metric that indicates how many times a company's inventory is sold and then replaced over a specific period.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a specific period, indicating efficiency in managing stock.

Days' Sales In Inventory

A measure of how efficiently a company turns its inventory into sales, calculated as inventory divided by daily sales.