Which of the Following Relationships Is Correct

question 64

Multiple Choice

Which of the following relationships is correct?

• A)Liabilities = Net worth - Assets
• B)Liabilities = Assets
• C)Liabilities = Net worth + Assets
• D)Net worth = Assets - Liabilities

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Definitions:

LIFO

An inventory valuation method where the last items added to inventory are considered the first ones sold during a period of time; stands for Last-In, First-Out.

FIFO

An accounting method for inventory valuation where the first items acquired are the first ones sold, standing for First In, First Out.

Inventory Turnover

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

Days' Sales

A metric that estimates the average length of time it takes for a company to convert its accounts receivable into cash.