AVERAGE AGE OF INVENTORY Definition

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AVERAGE AGE OF INVENTORY is calculated by the formula: 365 / inventory turnover.

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NAA is National Association of Accountants.

PREMIUM ON CAPITAL STOCK is excess received over the par value of stock issued. The premium account is shown under the paid-in capital section of stockholders equity because it resulted from the issuance of stock. It is not an income statement account since the company earns profit by selling goods and services to outsiders, not by issuing shares of stock to owners.

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