The Consumer Price Index and the GDP Deflator Are Two

question 79

Multiple Choice

The consumer price index and the GDP deflator are two alternative measures of the overall price level.Which of the following statements about the two measures is correct?

• A)The two measures are constructed differently, but they will always indicate the same inflation rate.
• B)The substitution bias applies equally to both measures.
• C)A change in the price of Japanese-made televisions shows up in the consumer price index but not in the GDP deflator.
• D)All of the above are correct.

Understand the concepts and procedures related to revenue recognition for software companies.

Differentiate between IFRS and U.S. GAAP in terms of accounting for sales with high risk of non-collection.

Comprehend the accounting treatment for franchise agreements, including revenue recognition and allocation of fees.

Recognize and correct errors in financial statements related to inventory management and capital expenditures.

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Definitions:

Stocks

Financial instruments that signify ownership in a company and represent a claim on part of the company's assets and earnings.

Government Borrowing

The process by which governments finance their expenditure by accruing debt through issuing securities like government bonds and bills.

Budget Balance

The financial position where total revenues are equal to total expenditures within a given period, resulting in neither a surplus nor a deficit.

Government Debt

The total amount of money that a government owes to creditors, which can result from borrowing to cover its expenses.