Question

In calculating inventory turnover, why is cost of goods sold used as the numerator? As the inventory turnover increases, what increasing risk does the business assume?

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Financial Accounting

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: Discuss and illustrate how a correction of an error in previouslyissued financial statements should ...

A: Errors: The comparability and consistency of the financial statements decreases when a company recor...

Q: Variance analysis, sales-mix and sales-quantity variances. Miami Infonautics, Inc., produces handhel...

A: 1. Statement that shows the calculation of actual contribution margin,

Q: What is the difference between a CPA’s unqualified opinion or “clean” opinion and a qualified one?

A: US GAAP:US GAAP are financial reporting standards provided by FASB, which is a US based board that i...

Q: Describing corporation characteristics Due to recent beef recalls, Southwest Steakhouse is consideri...

A: 1.In this case since B wish to protect his personal assets in the event of liquidation, the advantag...

Q: The following comment appeared in the financial press:“Inadequate financial disclosure, particularly...

A: Forecast: Any prediction or estimation is made for the events that is going to occur in the near fut...

Q: Journalizing issuance of no-par stock Eates Corp. issued 8,000 shares of no-par common stock for $13...

A: No-par common stock: The common stock that is issued at its fair market value is known as no-par com...

Q: he accountant for the firm owned by Randy Guttery prepares financial statements at the end of each m...

A: Prepare a trial balance for Randy Guttery, Landscape Consultant.

Q: Indicate the effect—Understate, Overstate, No Effect—that each of the following errors has on 2020 n...

A: Net Income:The net income is the excess of revenues over expenses after adjusting for depreciation e...

Q: As a certified public accountant, you have been contacted by Joe Davison, CEO of Sports-Pro Athletic...

A: Click to see the answer

Q: please help with problems 1 and 2

A: 1.

Q: Kimberly Payne and Arionna Maples decide to form a partnership by combining the assets of their sepa...

A: Partnership It is that form of organization which is owned and managed by two or more persons who in...

Q: The two basic sources of stockholders’ equity are assets and equity. preferred and common. retained...

A: Stockholder’s equity:It represents the amount of investment made by the owner in the business.

Q: Customer profitability. Bracelet Delights is a new company that manufactures custom jewelry. Bracele...

A: Customer Profitability Analysis: Customer profitability analysis is the process of ascertaining the ...

Q: Indicate how the following items are recorded in theaccounting records in the current year of Corone...

A: The adjustments to be made to the accounting records of Coronet CO for the current year would be bas...

Q: Preparing a statement of retained earnings Kingston, Inc. had beginning retained earnings of $135,00...

A: Click to see the answer

Q: Help with G and H

A: (g) Calculate the balance in the Finished Goods Inventory account at the end of the month.

Q: Purposes of cost allocation. Mary Martin recently started a job as an administrative assistant in th...

A: Direct cost:Direct cost is that cost which can be directly identified with the manufacturing of a pa...

Q: Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2016....

A: Prepare amortization schedule for the lessee-Company EL:

Q: Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2016....

A: Prepare amortization schedule for the lessee-Company EL:

Q: Considerations other than cost in pricing decisions. Happy Times Hotel operates a 100-room hotel nea...

A: 1.Calculate Happy Times Hotel's operating income or loss for the month.

Q: A company’s own stock that it has issued and repurchased is called outstanding stock. dividend stoc...

A: The correct answer is Option (d).

Q: Roundtree Manufacturing Co. is preparing its year-end financial statements and is considering the ac...

A: Change in accounting estimate: This change occurs when a change decides to change the estimates base...

Q: A Type A lease agreement calls for quarterly lease payments of $5,376 over a 10-year lease term, wit...

A: Compute the outstanding balance:

Q: Journalizing issuance of no-par stock Eates Corp. issued 8,000 shares of no-par common stock for $13...

A: No-par common stock: The common stock that is issued at its fair market value is known as no-par com...

Q: Describe the accounting for correction of errors.

A: Accounting errors refer to the errors made while recording, classifying or summarizing accounting in...

Q: For each of the following t-accounts, calculate the missing amount and write it in the space in the ...

A: Normal side of service revenue account is credit side. 

Q: Journalizing issuance of stock—no-par Wolcott Corporation issued 5,000 shares of no-par common stock...

A: Common stock: These are the ordinary shares that a corporation issues to the investors in order to r...

Q: What are interim reports? Why are balance sheets oftennot provided with interim data?

A: Click to see the answer

Q: Purrfect​ Pets, Inc. provides animal daycare for $ 28 per day. Customers buy three month​ packages, ...

A: Compute cash received in January.

Q: American Food Services, Inc., leased a packaging machine from Barton and Barton Corporation. Barton ...

A: 1.Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2...

Q: Define a change in estimate and provide an illustration.When is a change in accounting estimate effe...

A: Meaning:

Q: Analyzing and journalizing bond transactions On January 1, 2018, the Doctors Credit Union (DCU) issu...

A: Requirement 1:If the market interest rate is 5% when DCU issues its 7% bonds, the bonds will be pric...

Q: Splish Inc. has outstanding 11,800 shares of $10 par value common stock. On July 1, 2020, Splish rea...

A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. Th...

Q: Variance analysis, multiple products. The Robin’s Basket operates a chain of Italian gelato stores. ...

A: 1. 

Q: Computing earnings per share HEB Corporation had net income for 2018 of $60,450. HEB had 15,500 shar...

A: Earning per share (EPS), also called net income per share, is a market prospect ratio that measures ...

Q: Maxwell Furniture Center had accounts receivable of $20,000 at the beginning of the year and $54,000...

A: Accounts receivable is increased by ($54,000-$20,000) $34,000 during the year. 

Q: Accounting question: If you are doing a balance sheet with notes payable of 96,600. Assuming 13,600 ...

A: Income statement.

Q: What are diversified companies? What accounting problems are related to diversified companies?

A: Diversified Companies: The companies which are engaged in multiple businesses, provides a large vari...

Q: Analysis of growth, price-recovery, and productivity components (continuation of 12-21 and 12-22). R...

A: Click to see the answer

Q: What are the four basic rights of stockholders?

A: Stockholders of a CorporationStockholders of a corporation are the owners who have contributed to th...

Q: On 01-01-15, G purchased a machine for $10,000,000. Installation costs incurred and paid for on 01-0...

A: Click to see the answer

Q: Sheffield Corporation was organized on January 1, 2020. It is authorized to issue 9,400 shares of 8%...

A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. Th...

Q: Lance Berkman is the controller of Saturn, a dance club whose year-end is December 31. Berkman prepa...

A: Requirement 1: Identify the financial ratios that would be mostly affected by the action of Lance. L...

Q: Information that is reported free from error​ ________.   A. does not include estimates ...

A: Accounting Error: An accounting error is described as a discrepancy which is non-fraudulent in natur...