Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

5. Inventory

Inventory Errors

Financial Accounting

5. Inventory

Inventory Errors

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following is NOT associated with a high inventory turnover ratio?

Frequent inventory purchases and sales

Lower risk of obsolete inventory

Efficient inventory management

Excess inventory on hand

Previous problemNext problem

Verified step by step guidance

Understand the concept of inventory turnover ratio: It measures how efficiently a company sells and replaces its inventory over a specific period. A high inventory turnover ratio indicates that inventory is sold quickly, reflecting efficient operations.

Analyze the options provided: Each option describes a characteristic or consequence of a high inventory turnover ratio. Determine which one does not align with the concept.

Option 1: 'Frequent inventory purchases and sales' - A high inventory turnover ratio typically involves frequent buying and selling of inventory, as inventory is replenished quickly to meet demand.

Option 2: 'Lower risk of obsolete inventory' - When inventory is sold quickly, the risk of items becoming outdated or obsolete is reduced, which aligns with a high turnover ratio.

Option 4: 'Excess inventory on hand' - Excess inventory contradicts the idea of a high turnover ratio, as it implies inventory is not being sold efficiently. This is the correct answer because it is NOT associated with a high inventory turnover ratio.