Inventory Turnover Is Calculated by Dividing the Cost of Goods

question 20

True/False

Inventory turnover is calculated by dividing the cost of goods sold by the average inventory.

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Definitions:

Net Realisable Value

The estimated selling price in the ordinary course of business minus any costs necessary to make the sale, used primarily in inventory valuation.

Inventory Accounts

Accounts used in accounting to track the cost of the inventory held by a business until it is sold or otherwise disposed of.

Cost of Goods Manufactured

The total cost of producing goods during a specific period, including materials, labor, and overhead.

Total Manufacturing Costs

The aggregate cost of direct materials, direct labor, and manufacturing overhead incurred for products produced.