Purchasers - #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
Correct Answer: B
Explanation
Turnover ratio is the cost of goods sold divided by the average stock for the same period Cost of goods sold = opening stock + purchases - closing stock 25,120 + 44,880 - 27,840 = 42,160 Average stock = opening stock + closing stock / 2 25,120 + 27,840 = 52960 / 2 = 26,480 Turn over = 42,160 / 26,480 = 1.59 times Approximately 2 times
