Asset turnover 5. 2. Cost of merchandise sold 6. Operating cycle Sales Inventory Shrinkage (shortage) 3. 7. Gross profit Merchandise inventory 4. A. A measure of how effectively a business is using its assets to generate sales. B. Merchandise on hand (not sold) at the end of an accounting period. C. Sales minus the cost of merchandise sold. D. The amount by which the merchandise for sale, as indicated by the balance of the merchandise inventory account, is larger than the total amount of merchandise counted during the physical inventory. E. The cost that is reported as an expense when merchandise is sold. F. The process by which a company spends cash, generates revenues, and receives cash either at the time the revenues are generated or later by collecting an accounts receivable. G. The total amount charged customers for merchandise sold, including cash sales and sales on account. w C D