When the Social Security System Begins Running a Deficit During

question 649

Multiple Choice

When the Social Security system begins running a deficit during the years following 2018, the bonds in the trust fund will be drawn down. The funds to redeem these bonds will have to come from

• A) higher taxes, spending reductions in other programs, or additional government borrowing.
• B) the surplus funds deposited in governmental banking accounts.
• C) equity capital being liquidated.
• D) the sale of private equities and securities that the government has been purchasing with the funds.

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Definitions:

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and net income or loss.

Perpetual Inventory Method

An inventory accounting method where updates to the inventory records are made immediately following each sale or purchase.

Sales Returns and Allowances

A reduction in sales revenue that occurs when customers return goods or receive allowances for unsatisfactory goods, impacting the net sales figure.

Merchandise Inventory

Goods or products that a company holds for the primary purpose of selling them to customers.