A-LevelAccountingAnalysis and communication of accounting information9706/12 · Feb/Mar 2024 · Q211 Mark
H Limited’s cost of sales for the recent two years (Year 2 and Year 1) is as follows: Year 2 $ / Year 1 $: average inventory 100 000 / 65 000 credit purchases 910 000 / 760 000 cost of sales 850 000 / 750 000 Which statement regarding the efficiency of inventory turnover is correct?
AYear 2 is better because the average inventory is higher.
BYear 2 is better because the inventory turnover (in days) is higher.
CYear 2 is worse because the cost of sales is higher.
DYear 2 is worse because the inventory turnover (in days) is higher.
✓ Correct answer
D: Year 2 is worse because the inventory turnover (in days) is higher.
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