Which of the Following Values Remains the Same Irrespective of the Inventory

question 120

Multiple Choice

Which of the following values remains the same irrespective of the inventory valuation method used by a company? Assume the cost of inventory is rising.

• A)purchases
• B)cost of goods sold
• C)ending merchandise inventory
• D)net income

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Definitions:

Total Current Assets

The sum of all assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of the business.

Receivables Turnover Ratio

A financial metric indicating how efficiently a company collects its receivables, calculated by dividing net credit sales by the average accounts receivable.

Credit-Granting Policies

Guidelines established by lenders to determine the criteria and conditions under which credit is extended to borrowers.

Vertical Analysis

An accounting method where each entry in a financial statement is listed as a percentage of another item, typically used for comparing companies of different sizes or assessing trends within a single company over time.