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WAEC Financial Accounting 2007 Question 34

Question 34

Interpretation of Accounts

Which of the following formulae is used to calculate stock turnover rate?

  1. A.Sales ÷ Average stock
  2. B.Cost of sales ÷ Average stock
  3. C.Cost of sales ÷ Closing stock
  4. D.Cost of sales ÷ Opening stock
Show the answer and explanation

Answer: B (Cost of sales ÷ Average stock)

Explanation

Stock turnover = cost of sales ÷ average stock.