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WAEC Financial Accounting 1998 Question 9

Question 9

Interpretation of Accounts

Debtors: N30,000
Creditors: N20,000
Opening Stock: N15,000
Closing Stock: N18,000
Wages: N3,000
Salaries: N10,000
Purchases: N30,000
Sales: N60,000
The stock turnover is

  1. A.4.0 times
  2. B.3.6 times
  3. C.3.3 times
  4. D.2.0 times
  5. E.1.8 times.
Show the answer and explanation

Answer: E (1.8 times.)

Explanation

Average stock = (15,000 + 18,000) ÷ 2 = 16,500; cost of sales 30,000 ÷ 16,500 ≈ 1.8 times.