Exhibit 1-4 Which of the Following Must Be True

question 32

Multiple Choice

Exhibit 1-4 Which of the following must be true of line D in Exhibit 1-4?

• A)A decrease in P is associated with a decrease in Q.
• B)An increase in P is associated with an increase in Q.
• C)There is no relation between P and Q.
• D)There is an inverse relationship between P and Q.
• E)There is a direct relationship between P and Q.

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Definitions:

Capital Expenditures

The costs of acquiring fixed assets, adding to a fixed asset, improving a fixed asset, or extending a fixed asset’s useful life.

Fixed Assets

Long-term tangible assets held for business use and not expected to be converted to cash in the current or upcoming fiscal year, such as buildings, machinery, and land.

Capital Expenditures Budget

A financial plan dedicated to the projected spending on long-term assets that will deliver value in the future.

Sales Budget

An estimation of the revenue expected from sales activities over a certain period, used for financial planning and strategy.