In Accounting, Emphasis Is Placed on Determining Net Income in Accordance

question 3

True/False

In accounting, emphasis is placed on determining net income in accordance with generally accepted accounting principles.In finance, the primary emphasis is also on net income because that is what investors use to value the firm.However, a secondary financial consideration is cash flow, because cash is needed to operate the business.

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Definitions:

GDP Deflator

An economic measure that converts output measured at current prices into constant-dollar terms, helping to distinguish between real growth and inflation.

Inflation

The tempo at which the cost of general goods and services escalates, undermining the ability to purchase as time progresses.

Expenditures Approach

A method of computing a country's gross domestic product (GDP) by adding up total consumption, investment, government spending, and net exports.

GDP

Gross Domestic Product, a measure of the economic output of a country within a specified period of time.