A High Rate of Inventory Turnover Indicates Which of the Following

question 76

Multiple Choice

A high rate of inventory turnover indicates which of the following?

• A) The company is losing inventory to shrinkage.
• B) The company is making high net income.
• C) The company is experiencing a rapid decline in inventory levels.
• D) The company sells its inventory rapidly.

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Definitions:

Owner's Equity

The residual interest in the assets of a company after deducting liabilities, representing the owners' share of the company’s assets.

Owner's Investments

Funds or assets contributed by the owner(s) to the business to increase its capital.

Expenses

Costs incurred by a business in the process of earning revenue, such as rent, salaries, and utility bills.

Withdrawals

Amounts of money taken out from a bank account, investment fund, or retirement plan, often referring to the owner's use of funds for personal use.