In a Simple Circular-Flow Diagram,total Income and Total Expenditure Are

question 122

Multiple Choice

In a simple circular-flow diagram,total income and total expenditure are

• A) never equal because total income always exceeds total expenditure.
• B) seldom equal because of the ongoing changes in an economy's unemployment rate.
• C) equal only when one dollar is spent on goods for every dollar that is spent on services.
• D) always equal because every transaction has a buyer and a seller.

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Definitions:

Debits and Credits

Accounting terms used to record changes in accounts, where debits are entries on the left side of an account and credits are entries on the right.

Adjusting Entries

Journal entries made at the end of an accounting period to update accounts for accuracies in preparation for financial reporting.

Closing Entries

Journal entries made at the end of an accounting period to transfer balances from temporary accounts to permanent ones.

End-Of-Period Spreadsheet

A document used in accounting to compile all balance sheet and income statement accounts at the end of a reporting period.