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

3. Accrual Accounting Concepts

Introduction to Adjusting Journal Entries and Prepaid Expenses

Financial Accounting

3. Accrual Accounting Concepts

Introduction to Adjusting Journal Entries and Prepaid Expenses

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Multiple Choice

Which of the following formulas is used to calculate days' sales in inventory?

Days' Sales in Inventory = (Average Inventory \div Net Sales) \times 365

Days' Sales in Inventory = (Cost of Goods Sold \div Ending Inventory) \times 365

Days' Sales in Inventory = (Ending Inventory \div Cost of Goods Sold) \times 365

Days' Sales in Inventory = (Net Sales \div Average Inventory) \times 365

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Verified step by step guidance

Step 1: Understand the concept of Days' Sales in Inventory. It is a financial metric used to measure the average number of days a company takes to sell its inventory during a specific period. This helps assess inventory management efficiency.

Step 2: Identify the correct formula for Days' Sales in Inventory. The formula is: Days' Sales in Inventory = (Ending Inventory ÷ Cost of Goods Sold) × 365.

Step 3: Break down the components of the formula: 'Ending Inventory' refers to the value of inventory remaining at the end of the period, and 'Cost of Goods Sold' (COGS) represents the direct costs attributable to the production of goods sold by the company.

Step 4: Understand the calculation process. Divide the Ending Inventory by the Cost of Goods Sold to determine the proportion of inventory relative to sales. Then, multiply the result by 365 to convert this proportion into the number of days.

Step 5: Apply the formula to a given scenario or dataset. Ensure you have accurate values for Ending Inventory and Cost of Goods Sold, and perform the division and multiplication steps systematically to calculate Days' Sales in Inventory.