When Should an Average Amount Be Used for the Numerator

question 20

Multiple Choice

When should an average amount be used for the numerator or denominator?

• A)When the ratio consists of only statement of financial position items
• B)When the ratio consists of only income statement items
• C)When a ratio consists of an income statement item and a statement of financial position item
• D)Never; the numerator or denominator should always be a year-end balance

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Definitions:

Pure Competition

A market structure characterized by an extremely large number of sellers and buyers, homogeneous products, and easy entry and exit from the market.

Market Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded by consumers over a period of time.

Nonprice Competition

A marketing strategy where companies differentiate their products or services based on attributes other than price, such as quality, design, or brand reputation.

Pure Competition

A market structure characterized by a large number of sellers offering standardized products or services, with no single seller able to influence price or market conditions.