Which of the Following Mathematical Equations Is Used to Compute

question 45

Multiple Choice

Which of the following mathematical equations is used to compute the payables deferral period (DPO) ?

• A)Payables deferral period (DPO) = Payables turnover/360
• B)Payables deferral period (DPO) = Payables turnover × 360
• C)Payables deferral period (DPO) = Daily credit purchases/Accounts payable
• D)Payables deferral period (DPO) = Accounts payable/Daily credit purchases
• E)Payables deferral period (DPO) = Cost of goods sold/Accounts payables

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Definitions:

GAAP

Generally Accepted Accounting Principles; a collection of commonly-followed accounting rules and standards for financial reporting.

Grant Date

In the context of stock options, the grant date is the date on which an employee is given the right to exercise their options at a set price.

Common Stock

represents units of ownership in a corporation, giving shareholders voting rights and a share in the company’s profits through dividends.

Market Value

The current quoted price at which an asset or service can be bought or sold in a marketplace.