Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 4 - No. 10)
What is the formula to calculate the cost of sales, given the rate of inventory turnover and the average inventory?
Cost of sales = Average inventory * Rate of inventory turnover
Cost of sales = Average inventory / Rate of inventory turnover
Cost of sales = Rate of inventory turnover / Average inventory
Cost of sales = Average inventory + Rate of inventory turnover
Explanation
The formula is Cost of sales = Average inventory * Rate of inventory turnover.
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