The Circular Flow Model Shows the

question 23

Multiple Choice

The circular flow model shows the

• A)flow of expenditure and incomes that arise from the households', firms', and governments' decisions.
• B)flow of natural resources from firms to the private market to government and back to firms.
• C)distribution of income to the different factors of production.
• D)combinations of the factors of production needed to produce goods and services.
• E)distribution of income and consumption goods across income levels.

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Definitions:

Notes Receivable

Financial assets representing amounts owed to a company, usually evidenced by a formal promissory note.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the company's operating cycle, whichever is longer.

Allowance Method

An approach in accounting that calculates expected losses from bad debts by assessing uncollectible accounts at the conclusion of each period.

Estimated Bad Debts

A provision in accounting for the amount of receivables that are expected not to be collected, considered an expense.