At the End of the Year,Ford Realizes It Has Overproduced

question 45

Multiple Choice

At the end of the year,Ford realizes it has overproduced Fiestas,because 2,500 of them are left unsold.How is this accounted for in that year's GDP?

• A)The cars are considered inventory and their value will increase investment.
• B)The cars are considered durable goods,and their value will increase consumption.
• C)The cars are not counted until they are sold in next year's GDP.
• D)None of these statements is true.

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Definitions:

Accumulated Other Comprehensive Income

A component of shareholders' equity that includes income, gains, and losses that are excluded from net income, reflecting changes in equity from non-owner sources.

Sinking Funds

A method for a company to pay off debt by setting aside money over time, ensuring funds are available to repay the debt or replace an asset.

Current Liability

A company's debts or obligations that are due within one year or within the normal operating cycle, necessitating the use of current assets or the creation of new current liabilities.

Operating Cycle

The period it takes for a company to purchase inventory, sell it, and convert the sale into cash.