Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

Which type of sales/purchases is taken into account while calculating the Creditor's Turnover Ratio?

Options:

Total credit purchases

Total cash sales

Total credit sales

Total cash purchases

Correct Answer:

Total credit purchases

Explanation:

Trade payables turnover ratio indicates the pattern of payment of trade payable. As trade payable arise on account of credit purchases, it expresses relationship between credit purchases and trade payable.