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SSC Financial and Cost Accounting P-1 QUESTION #6147
Question 1

A trader calculates trade receivables turnover as: (Trade Receivables ÷ Denominator) × 365. What is the denominator?

  • Credit purchases
  • Credit sales✔️
  • Trade payables
  • Trade receivables
Correct Answer Explanation

Option B (Credit sales) is correct.

Trade receivables arise from credit sales. The formula is:

Trade Receivables Days = (Trade Receivables ÷ Credit Sales) × 365

Credit purchases relate to trade payables, not receivables.