Question 1

A company has Cost of Sales of $1,460,000 for the year. Its opening inventory was $200,000 and closing inventory is $280,000. Assuming a 365-day year, what is the inventory turnover period in days? (Use average inventory. Enter the number only)

Accepted Answer

Calculate Average Inventory. Then use the formula: (Average Inventory / Cost of Sales) * 365.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Using only closing inventory instead of average inventory, or dividing by Revenue instead of Cost of Sales.

A company has Cost of Sales of $1,460,000 for the year. Its opening inventory was $200,000 and closing inventory is $280,000. Assuming a 365-day year, what is the inventory turnover period in days? (Use average inventory. Enter the number only)

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 3

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