Accounting for IGCSE & O level - Advanced Principles (Section 2 - No. 23)
In relation to inventory, which of the following is FALSE?
Inventory should be valued at the lower of its cost or net realizable value.
If a business holds too much inventory, it may become unmarketable.
Inventory turnover measures the average value of inventory held.
Inventory should be valued at the cost of each item.
Explanation
Inventory turnover measures the cost of goods sold divided by average inventory.
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