The Total-Revenue Test for Elasticity

question 316

Multiple Choice

The total-revenue test for elasticity

• A)is equally applicable to both demand and supply.
• B)does not apply to demand, because price and quantity are inversely related.
• C)does not apply to supply, because price and total revenue have a positive correlation.
• D)applies to the short-run supply curve but not to the long-run supply curve.

Understand the conditions under which revenue recognition occurs, and the differences between accrual and cash basis accounting.

Recognize the importance and application of the matching principle in revenue and expense recognition.

Identify the critical events that determine the timing of net income recognition and the distinction between operating and non-operating income.

Distinguish between book value and carrying amount in the context of accounting records and financial statements.

---

Definitions:

Disconfirming Instances

Instances or examples that challenge or falsify a hypothesis or theory.

Confirmation Bias

The inclination to seek out, understand, prefer, and remember information in a manner that corroborates an individual's existing beliefs or theories.

Generalization

A principle, statement, or idea having general application.

Generalization

The process of forming conclusions based on a limited set of observations or examples.