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
jamb 2012accounting

The correct answer is B. 2

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

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