If the Price of Gasoline Increases Significantly for Several Months

question 50

Multiple Choice

If the price of gasoline increases significantly for several months:

• A) consumers will purchase fewer large sports utility vehicles
• B) consumers will not change their automobile purchasing decisions
• C) consumers will purchase less ethanol than previously
• D) all of the other three answers

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Definitions:

Adjusting Entry

Journal entries made at the end of an accounting period to allocate income and expenses to the period in which they actually occurred.

Maturity Value

The amount that will be payable to the holder of a financial instrument at the date of its maturity; it includes the principal amount plus any accrued interest.

Interest

The cost of borrowing money or the return on investment, calculated as a percentage of the principal sum.

Percent of Sales Method

A forecasting technique that estimates future financial statements based on a predicted sales growth rate and historical financial ratios.