Which of the Following Accurately Describes How Earnings from Capital

question 136

Multiple Choice

Which of the following accurately describes how earnings from capital eventually get paid to households?

• A)Households can own a stock of capital and rent it to firms.
• B)Households lend money to firms, who then pay interest to the households.
• C)Households that own stock in firms receive dividends.
• D)All of the above are correct.

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Definitions:

Raw Materials

The basic substances or components that are used in the manufacturing process to produce finished goods.

T-Accounts

A visual representation used in accounting to depict the debits and credits of an account, showing two sides of transactions within a ledger.

Transactions

Financial activities or exchanges between parties that involve the transfer of goods, services, or funds.

Overapplied Overhead

When the overhead costs allocated for manufacturing are higher than the actual overhead expenditures.