What Is a Normative Economic Statement

question 23

Multiple Choice

What is a normative economic statement?  

• A) a hypothesis used to test economic theory 
• B) a statement of fact 
• C) a statement of what ought to be, NOT of what is 
• D) a statement that indicates what will occur if certain assumptions are true

---

Definitions:

Principles-based

An approach that bases decisions on general principles or values rather than specific rules.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board that are becoming the global standard for the preparation of public company financial statements.

GAAP

Generally Accepted Accounting Principles; a collection of commonly-followed accounting rules and standards for financial reporting.

Accounting For Inventories

The process of tracking and managing the goods a company holds for the purpose of sale or production, including valuation and cost determination.