If a Firm Has Been Experiencing Increased Sales While Its

question 7

Multiple Choice

If a firm has been experiencing increased sales while its inventory levels have decreased,then

• A) its inventory turnover is decreasing,and its average age of inventory is increasing.
• B) its inventory turnover is decreasing and its average age of inventory is decreasing.
• C) its inventory turnover is increasing and its average age of inventory is increasing.
• D) its inventory turnover is increasing and its average age of inventory is decreasing.

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Definitions:

Notes Payable

Liabilities represented by written promises to pay specific sums of money at future dates, typically evidenced by formal instruments of credit.

Accounts Payable

Liabilities to creditors for goods or services purchased on credit, representing obligations that a company needs to pay off in the near term.

Interest Expense

The cost incurred by an entity for borrowed funds, recognized as an expense in the income statement over the period the funds are borrowed.

Unearned Revenue

Money received by a company for services or products which have not yet been delivered or performed.