The Way a Seasonal Index Is Computed Involves Which of the Following

question 154

Multiple Choice

The way a seasonal index is computed involves which of the following steps?

• A) Remove the effect of seasonal and random variation by regression analysis.
• B) For each time period,compute the ratio,which removes most of the trend variation for that time period.
• C) Calculate the average of all the ratios:over all time periods to remove random variation and leaving a measure of seasonality.
• D) All of these choices are true.

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Definitions:

Gross Profit

The difference between revenue and the cost of goods sold, indicating the financial health and performance of a business.

Freight In

The cost associated with transporting goods from suppliers to the buyer, which is added to the cost of inventory.

Inventory Shrinkage

The loss of products between purchase from supplier and sale to customer, often due to theft, damage, or errors.

Adjusting Entry

A journal entry made in the accounting records at the end of an accounting period to allocate income and expenditure to the correct period.