Which of the Following Is the Correct Formula to Calculate

question 102

Multiple Choice

Which of the following is the correct formula to calculate inventory turnover?

• A) Inventory turnover = Cost of goods sold / Average merchandise inventory
• B) Inventory turnover = Cost of goods sold × Average merchandise inventory
• C) Inventory turnover = Cost of goods sold + Average merchandise inventory
• D) Inventory turnover = Cost of goods sold - Average merchandise inventory

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Definitions:

Interest-Bearing Note

A debt instrument in which the issuer is obligated to pay a specified interest rate on the principal amount at regular intervals until maturity, in addition to repaying the principal.

Interest Expense

The cost incurred by an entity for borrowed funds; it is the price paid for the use of borrowed money, or, for corporations, the price paid for the use of borrowed capital.

Contingent Liability

A potential financial obligation that may arise in the future depending on the outcome of an uncertain event or situation.

Probable Loss

A loss in financial terms that is likely to occur based on current information and judgment.