Real Income Is Equal to ________ and a Relative Price

question 210

Multiple Choice

Real income is equal to ________ and a relative price is given by ________.

• A) the dollar amount of income divided by the dollar price of a good; the dollar price of one good divided by the dollar price of the good whose relative price is being calculated
• B) the dollar price of one good divided by the dollar price of the good whose relative price is being calculated; the dollar amount of income divided by the dollar price of a good
• C) The dollar price of one good divided by the dollar price of another good; the dollar price of one good divided by the dollar price of the good whose relative price is being calculated
• D) the dollar amount of income; real income divided by the dollar amount of income

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Definitions:

Gross Profit Method

An inventory costing method to estimate the cost of goods sold and ending inventory, which calculates gross profit by subtracting the cost of goods sold from net sales.

FIFO Method

"First In, First Out," an inventory valuation method assuming that the first items purchased are the first ones sold, affecting the cost of goods sold and inventory value.

Cost Flow Method

An accounting technique used to value inventory and determine the cost of goods sold by assuming a flow of costs.

FOB Shipping Point

A shipping term indicating that the buyer takes responsibility for goods and their transportation costs as soon as the goods leave the seller's premises.