The New Growth Theory Asserts That Profits Are

question 101

Multiple Choice

The new growth theory asserts that profits are

• A)permanent, because physical activities can be replicated.
• B)an illusion, since costs are never fully covered.
• C)temporary, because the discoveries that lead to profits are eventually used by all.
• D)permanent, because they are derived from discoveries.
• E)not an essential component determining whether the economy grows or not.

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Definitions:

Purchases Returns

Goods returned by the buyer to the supplier due to defects, damage, or other reasons, which can reduce the total amount of purchases.

Retail Inventory Method

An accounting technique used in retail to estimate the ending inventory value based on the relationship between the cost and selling price of goods.

Cost-to-retail Ratio

A method used in inventory accounting that estimates the value of ending inventory by calculating the cost to retail price ratio.

Homogeneous Inventory

An inventory system where all items are similar in nature and use, making management and valuation processes more straightforward.