When calculating accounts payable turnover,if there is not a material difference between the company's beginning inventory and ending inventory,then:
A)an adjustment still must be made for the difference to reduce or increase purchases.
B)it should just be noted in the footnotes.
C)it is not necessary to adjust for the inventory.
D)an adjustment still must be made for the difference to reduce cost of goods sold.

Question

Quizplus · Accepted Answer

Accounts payable turnover ratio is calculated by dividing purchases by average accounts payable. It is not necessary to adjust for the inventory if there is no material difference between beginning and ending inventory as inventory does not affect accounts payable amount. Therefore, choice (C) is the correct answer.

When Calculating Accounts Payable Turnover,if There Is Not a Material