The Number of Days' Sales in Inventory Is One Means

question 147

True/False

The number of days' sales in inventory is one means of expressing the relationship between the cost of goods sold and inventory.

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Definitions:

Gross Profit

The difference between net sales and the cost of goods sold, indicating the efficiency of a company's production process.

Gross Sales

The total sales revenue of a company without any deductions for returns, allowances, or discounts.

Cost of Sales

The direct costs attributable to the production of the goods sold by a company, including raw materials, labor, and manufacturing overhead.

Percentage of Credit Sales Method

An accounting technique used to estimate the value of uncollectible accounts receivable based on a historical percentage of sales that resulted in bad debts.