1. A merchandiser uses a perpetual inventory system. The third step in the proce
ID: 2490148 • Letter: 1
Question
1.
A merchandiser uses a perpetual inventory system. The third step in the process of closing the accounts of a merchandiser is to ________.
2.
Which of the following is the correct formula to calculate days' sales in inventory?
A. make the revenue accounts equal to zero via the Income Summary account B. make the Income Summary account equal to zero via the Owner, Withdrawals account C. make the Income Summary account equal to zero via the Owner, Capital account D. make the expense accounts equal to zero via the Income Summary accountExplanation / Answer
2.
Answer: A
Days sales in inventory = 365 / (Cost of goods sold ÷ Average inventory)
The denominator is also called “inventory turnover” ratio.
Therefore, Days sales in inventory = 365 days / Inventory turnover
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