One of the Widely Acknowledged Problems with Using the Consumer

question 147

Multiple Choice

One of the widely acknowledged problems with using the consumer price index as a measure of the cost of living is that the CPI

• A)fails to account for consumer spending on housing.
• B)accounts only for consumer spending on food, clothing, and energy.
• C)fails to account for the fact that consumers spend larger percentages of their incomes on some goods and smaller percentages of their incomes on other goods.
• D)fails to account for the introduction of new goods.

Analyze the use of financial ratios and other tools in assessing nonprofit organizational performance.

Distinguish between the different types of financial contributions and their implications for nonprofit accounting.

Understand the specific financial management and reporting responsibilities of nonprofit management, including budgeting practices and the role of internal audit committees.

Examine the characteristics and legal considerations of various types of endowments and funds within nonprofit organizations.

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Definitions:

Income Summary

An account used in the closing process that summarizes revenues and expenses for a period, determining the net income or loss.

Owner's Drawings

Withdrawals made by the owner of a business from the company's funds for personal use.

Owner's Equity Accounts

Accounts reflecting the owner's investment in the business plus any profits retained in the business, minus any withdrawals made.

Investment in Stock

The purchase of shares in a company to gain partial ownership and potentially earn dividends or capital gains.