According to the Application in Chapter 2, Many Video Game

question 50

Multiple Choice

According to the Application in Chapter 2, many video game makers in the early 1980s went out of business because:

• A) a large increase in the supply of games lowered the price of video games so much that it made them unprofitable.
• B) a large decrease in the supply of games raised the price of video games so much that consumers stopped buying them.
• C) a large decrease in consumer demand lowered the price of video games so much that it made them unprofitable.
• D) a large increase in consumer demand raised the price of video games to the point that they were no longer affordable.

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Definitions:

Installment Receivables

Money owed to a company from its customers who have purchased goods or services on a payment plan over a set period of time.

Realized Gross Profit

The total earnings a company makes after deducting the direct costs associated with producing its goods or services.

Revenue Recognition

The accounting principle that dictates when revenue is considered earned and can be recorded in the company's financial statements.

IASB And FASB

The International Accounting Standards Board and the Financial Accounting Standards Board, two organizations involved in setting global and U.S. accounting standards, respectively.