Which of the following statements incorrectly describes the accounts payable turnover ratio?
A)A high ratio indicates that suppliers are being paid in a timely manner.
B)It increases when inventory is sold on account regardless of the sales price.
C)It can be manipulated by aggressively paying off accounts payable at year-end.
D)It is not affected by the choice of inventory accounting methods.

Question

Quizplus · Accepted Answer

Accounts payable turnover = Cost of goods sold F1F1F1S1F1F1F10 Average accounts payable; the choice of inventory method affects cost of goods sold and therefore affects the ratio as well.

Which of the Following Statements Incorrectly Describes the Accounts Payable