Question

Inventory turnover measures a.the relationship between cost of goods sold and the amount of inventory carried during the period. b.the times purchases are turned into inventory during the period. c.the efficiency and effectiveness of costing management. d.the average amount of inventory sold.

Answer 1

a. the relationship between cost of goods sold and the amount of inventory carried during the period.

Step-by-step explanation:

An inventory turnover can be defined as a measure of the relationship between cost of goods sold (COGS) and the amount of inventory carried during the period the goods were purchased by the consumers or customers of a business firm.

This ultimately implies that, an inventory turnover is a measure of the amount of times an inventory is used or sold by an organization at a specific period of time.

Basically, the inventory turnover is calculated by dividing cost of goods sold by average inventory.

Additionally, the Expense Account selected by a manufacturer or a producer for inventory parts would normally comprise of the account type Cost of Goods Sold.