The Accounts Payable Turnover Ratio Uses Purchases on Account in Its

Multiple Choice

The accounts payable turnover ratio uses purchases on account in its computation. Although firms do not disclose their purchases, the analyst can calculate the purchase amount as follows:

A) Purchases = Cost of Goods Sold + Ending Inventory + Beginning Inventory
B) Purchases = Cost of Goods Sold + Ending Inventory - Beginning Inventory
C) Purchases = Cost of Goods Sold - Ending Inventory + Beginning Inventory
D) Purchases = Cost of Goods Sold - Ending Inventory - Beginning Inventory
E) Purchases = Cost of Goods Sold x Ending Inventory - Beginning Inventory