A Car That Is Produced in 2018 Is Not Sold

question 8

Multiple Choice

A car that is produced in 2018 is not sold until 2019.According to the definition of GDP, in which year's GDP should it be counted?

• A)2018
• B)2019
• C)Half of the sales price will count as part of 2018 GDP and half will count as part of 2019 GDP.
• D)The production cost will count as part of 2018 GDP while the sales price will count as part of 2019 GDP.
• E)It should not be counted in either years' GDP.

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Definitions:

Residual Value

The estimated amount that an asset will be worth at the end of its useful life.

Gross Margins

A company's revenue minus its cost of goods sold, expressed as a percentage, indicating the percentage of sales revenue that turns into profit.

Opening Inventory

The value of a company's inventory at the beginning of its accounting period, which includes raw materials, work-in-progress, and finished goods ready for sale.

Net Book Value

The value of an asset as recorded on the balance sheet, subtracting accumulated depreciation or amortization from its original cost.