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A) Cost of good sold divided by gross sales B) Total purchases divided by inventory C) Cost of good sold divided by inventories D) Total purchase divided by cost of good sold
Answer will be C) Cost of good sold divided by inventories
answer C is the correct answer
Thanks for your responses
The answer is
Cost of goods sold divided by gross sales
Answer (c). Inventory turnover is one of the analytical methods that we use to identify whether inventory is overstated and cost of good sold is understated if the ratio is low.
answe c is the answer.........
(correct answer is (c
Misstatement of inventories or cost of good sold can be detected by Cost of good sold divided by inventories because this give us inventory turnover.
If inventory turnover low, It mean there is a problem......
A) Cost of good sold divided by gross sales. all other answers have no meaning to verify whether the COS or inventory is overstatement or not. COS/Sales must have almost all a fixed percentage, since the COS and the sales figures are variable in nature but the COS/Sales % must be fixed. therefore when the percentage have changed, this means that there is something wrong in the sales figures and/or COS figures and/or inventory figures.
option C is correct.............................
Very good question The answer is no. (c)
Answer: C) Cost of good sold divided by inventories
This two accounts are vital in inventory turnover computation. Any abnormalities in the turnover indicates a miscalculation of the two accounts.
