Question

All things being equal, a company would prefer:

		a lower accounts receivable turnover ratio.
		a higher accounts receivable turnover ratio.
		a lower profit margin.
		a lower inventory turnover ratio.

If a company determines cost of goods sold only at the end of the period after taking a physical inventory, it

		has better control over inventories.
		uses a perpetual inventory system.
		uses a periodic inventory system.
		uses a combination of the perpetual and periodic inventory systems.

Answer 1

Question 1

Correct answer------------a higher accounts receivable turnover ratio.

.

A company would want a higher accounts receivable turnover ratio since it ensures that cash is collected fast from sales on account.

Question 2

Correct answer------------uses a periodic inventory system

.

In periodic inventory system inventory is valued at the end of the year or month only. In periodic system ending inventory and cost of goods sold is only calculated at period end.

In perpetual inventory is updated as and when sales are recorded or goods are purchased.