To Compute the Real Income of a Household,the Index That

question 13

Multiple Choice

To compute the real income of a household,the index that should be used is the

• A)Producer Price Index (PPI).
• B)Consumer Price Index (CPI).
• C)GDP deflator.
• D)Cost of Living Adjustment (COLA).

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Definitions:

Net Income

The total earnings or profit of a company after all expenses and taxes have been deducted from revenue.

GAAP

Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting used in any given jurisdiction, primarily in the United States.

Expense Recognition

The accounting principle that dictates the timing of reporting an expense in the financial statements, ensuring expenses are recorded when incurred.

Revenue Recognition

The accounting principle that dictates the conditions under which revenue is recognized and recorded, often requiring that revenue is earned and measurable.