The Inventory Turnover Ratio Is Computed by Dividing Average Inventory

question 162

True/False

The inventory turnover ratio is computed by dividing average inventory by cost of goods sold.

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Definitions:

Owner's Capital

The amount of money and other assets invested in a business by its owner or owners.

Owner's Drawings

The withdrawal of business assets by the owner for personal use.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts in preparation for the new accounting period.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was acquired, representing the wear and tear over time.