If the Inflation Rate Was 10 Per Cent and the Price

question 42

Multiple Choice

If the inflation rate was 10 per cent and the price index was 120 in 2010, then what was the approximate value of the price index in 2009?

• A) 130
• B) 121
• C) 109
• D) 100

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Definitions:

Subsidiary Ledgers

Detailed ledgers that contain information supporting accounts listed in the general ledger, such as customer and vendor details.

Perpetual Inventory System

An accounting method that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

FIFO

First In, First Out, an inventory valuation method where goods purchased or produced first are sold or used first.

LIFO

An inventory valuation method, "Last-In, First-Out," where the most recently produced items are recorded as sold first.