Double-Entry Bookkeeping Implies That

question 58

Multiple Choice

Double-entry bookkeeping implies that:

• A)profits cannot be negative because profit equals the value of final output less costs.
• B)profits fill the gap between the sum of employee compensation, rents and interest on the one hand and the value of final output on the other hand.
• C)aggregate income net of profits is less than the value of final output because profit can add or take away from final output.
• D)aggregate income net of profits is greater than the value of final output because profit can add or take away from final output.

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Definitions:

Net Income

The amount of money remaining when all operating expenses, interests, taxes, and preferred stock dividends have been deducted from a company's total revenue.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated for use in financial statements and inventory management.

Perpetual Inventory System

An inventory management system where updates are made continuously as transactions occur.

First-In, First-Out

An inventory valuation method where the oldest items are sold or used first.