Question 46
Interpretation of AccountsPurchases ₦44,880
Sales ₦85,850
Trade creditors ₦12,250
Trade debtors ₦24,000
Accrued expenses ₦350
Prepaid expenses ₦700
Stock 1/1/2006 ₦25,120
Stock 31/12/2006 ₦27,840
Determine the number of times stock was turned over during the period to the nearest figure.
- A.1
- B.2
- C.3
- D.4.
Show the answer and explanation
Answer: B (2)
Explanation
Cost of sales = 25 120 + 44 880 − 27 840 = 42 160. Average stock = (25 120 + 27 840)/2 = 26 480. 42 160 ÷ 26 480 ≈ 1.6, about 2 times.