The Price of a New Car Is $40,000 While the Price

question 411

Multiple Choice

The price of a new car is $40,000 while the price of a five-year old car of the same brand is $16,000. The next year the price of the new car increases to $44,000 and the price of a five-year old car of the same brand is $17,600. The relative price of the used car

• A) decreased by $2,400.
• B) decreased by 10 percent.
• C) increased by 10 percent.
• D) remained constant at 0.4.

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Definitions:

Revenue Recognition

Revenue Recognition is the accounting principle that dictates the specific conditions under which income becomes recognized as revenue.

Goods Delivered

Refers to products or merchandise that have been transported and received by the buyer.

Before Delivery

A phase in a transaction or process that occurs prior to the transfer of goods or completion of service delivery.

Service Revenue

Income earned from providing services as opposed to selling goods.