The Inventory Turnover Ratio Calculates

question 8

Multiple Choice

The inventory turnover ratio calculates:

• A) how many times the inventory turns over in one period.
• B) number of times inventory is purchased in one period.
• C) the dollar amount of change in inventory in one period.
• D) None of these answers are correct.

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Definitions:

Unpaid Salaries

Salaries that have been incurred but not yet paid out to employees, often representing a liability for the company.

Depreciation Expense

An accounting method that allocates the cost of a tangible asset over its useful life, reflecting wear and tear, deterioration, or obsolescence.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against an asset since it was acquired, up to a specific date.

Expense Recognition

The accounting principle of matching expenses with revenues in the period in which they are incurred to generate those revenues, ensuring accurate financial reporting.