In What Sense Are Profit and Loss Signals

question 57

Multiple Choice

In what sense are profit and loss signals?

• A)They signal resources where to move.
• B)They signal what goods consumers may want to buy and what goods they may not want to buy.
• C)They are important for government and business accounting procedures.
• D)a and b

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Definitions:

Ending Inventory

The total value or quantity of goods available for sale at the end of an accounting period, calculated by adding any purchases to the beginning inventory and subtracting sold goods.

Gross Profit Method

An accounting technique to estimate the amount of inventory sold over a period, calculated as sales minus the cost of goods sold at a gross margin.

Perpetual Inventory System

An accounting method where inventory records are continuously updated to reflect sales, purchases, and stock levels in real-time.

Cost of Goods Sold

A financial metric that represents the direct costs attributable to the production of goods sold by a company.