A high Inventory Turnover Ratio generally indicates: MCQ with Answer and Explanation

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A high Inventory Turnover Ratio generally indicates:

A. Efficient inventory management and fast sales

B. Slow-moving inventory

C. Low sales volume

D. Overstocking

Answer: Option A

Solution (By JKSSB Mock Tests)

It means the company replenishes and sells its inventory quickly, pointing to strong sales and efficient management.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

Opportunity Cost can be best described as:

A. A cost that cannot be changed

B. The cost of idle time

C. The benefit sacrificed when choosing one alternative over the next best alternative

D. The direct cost of making a product

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Correct Answer: Option C

Explanation:
Opportunity cost is a crucial economic and management concept reflecting the value of the foregone alternative in decision making.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2

A company uses 'Economic Order Quantity' (EOQ) of 500 units. Annual demand is 5,000 units. Number of orders per year will be:

A. 5

B. 10

C. 500

D. 100

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Correct Answer: Option B

Explanation:
Number of orders = Annual demand / EOQ = 5,000 / 500 = 10.

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Question #3

The 'Incremental Borrowing Rate' is used in lease accounting when:

A. The lessee cannot determine the interest rate implicit in the lease

B. For all leases

C. Never

D. The lessor does not disclose rate

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Correct Answer: Option A

Explanation:
If implicit rate is not readily determinable, lessee uses its incremental borrowing rate.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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