Day: April 3, 2020

A business’s rate of stock turnover during any given accounting period is calculated as . . .?

Select ONE answer:

1. the business’ sales for that period divided by the value of its stock at the beginning of the period.
2. the business’ sales for that period divided by the value of its stock at the end of the period.
3. the business’ purchases for that period divided by the value of its stock at the end of the period.
4. the business’ cost of sales for that period divided by the average of the business“ stock during the period (the average being the sum of its stock at the beginning of the period and its stock at the end of the period divided by two).

 

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – Stock Turnover = Cost of Sales / Average Stock

 

 

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