1)Johnson\'s Company\'s Number of Days\'s Sales in Inventory is 30 days for 2012

Question

1)Johnson's Company's Number of Days's Sales in Inventory is 30 days for 2012. Competitor of the company have an average of Number of Days; Sales in inventory of 15 days for 2012. Johnson's Number of Days' Sale in inventory ratio indicates

a. is pricing its products too low

b. is selling its inventory much more quicly than the industry average

c. may have obsolete inventory or problemswoth sales

d. has too litle inventory on hand at the end of 2012

2) The adjusting journal entry to record depreciation expense

a. decrease Net Income, has no effect on asset and decreases cash flows

b.decrease Net Income, decreases assets and decrease cash flows

c.decrease Net Income, has no effect on assets no efect on cash flows

d.decrease Net Income, decreases asset and has no effect on cash flow

Explanation / Answer

Hi,

Please find the answer as follows:

Part A:

Option C (may have obsolete inventory or problemswoth sales) is the correct answer.

Part B:

Option D (decrease Net Income, decreases asset and has no effect on cash flow) is the correct answer.

Thanks.

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