The Circular Flow Shows That

question 299

Multiple Choice

The circular flow shows that

• A) GDP equals aggregate income.
• B) aggregate expenditure is less than aggregate income.
• C) aggregate production equals aggregate expenditure.
• D) Both answers A and C are correct.

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Definitions:

Land

It refers to the earth's surface extending downward to the center and upward to infinity, including permanently attached natural objects, and is considered a non-depreciable asset in accounting.

Journalizing

The process of recording transactions in the journal in chronological order, marking the first step in the accounting cycle.

Posting

The process of transferring journal entries to their respective accounts in the ledger.

Balancing

The act of ensuring that two sets of records (usually the credits and debits in an account) are in agreement.