Accounts payable are $75,000 and average daily purchases are $3,000. What is days payable outstanding?
Correct Answer
D) 25 days.
DPO is accounts payable divided by average daily purchases: $75,000 / $3,000 = 25 days.
Why This Is the Correct Answer
DPO is accounts payable divided by average daily purchases: $75,000 / $3,000 = 25 days.
Why the Other Options Are Wrong
Option A: 15 days.
15 days. is below the supported result for dpo; it likely uses the wrong base, period, or account bucket.
Option B: 20 days.
20 days. is below the supported result for dpo; it likely uses the wrong base, period, or account bucket.
Option C: 30 days.
30 days. is above the supported result for dpo; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Accounts and payable live in different drawers; Reviewing Vendor tells which opens.
Reference Hint
Study anchor (closed-book): memorize DPO from CSLB Law and Business Study Guide; California tax and payroll guidance / CSLB Law and Business Study Guide Business Finances; know the rule or calculation trigger without relying on exam-room lookup.
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