A Bakery Uses Flour to Produce Bread

question 47

Multiple Choice

A bakery uses flour to produce bread. When calculating GDP, we include ________, because when we add the value of the flour to the value of the loaf of bread to calculate GDP, the result is ________.

• A)only the value of the bread sold in a store; double counting
• B)only the value of the flour used to produce the bread; double counting
• C)both the value of the bread sold in a store and the value of the flour used to produce the bread; double counting
• D)both the value of the bread sold in a store and the value of the flour used to produce the bread; the true value of the economy's output
• E)none of the above

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Definitions:

GAAP

Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting.

Principles-based

An approach focused on general guidelines, allowing for the exercise of professional judgment and flexibility in applying standards.

Bank Reconciliation

The process of matching and balancing figures in accounting records with those displayed on a bank statement.

Outstanding Checks

Checks that have been written and recorded in the account ledger but have not yet been cashed or cleared by the bank.