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: 26 days.
26 days adds one more than the division gives; 75,000 / 3,000 is exactly 25. The correct calculation is 75,000 / 3,000 = 25.
Option B: 24 days.
24 days comes up one short; 24 x 3,000 does not reach 75,000. The correct calculation is 75,000 / 3,000 = 25.
Option C: 0.04 days.
0.04 days divides daily purchases by payables (3,000 / 75,000), inverting the ratio. The correct calculation is 75,000 / 3,000 = 25.
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.
Independent practice; verify any reference hint against the edition and category permitted for your booking. Official exam and reference-list sources →
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