When Constructing an Economic Model, Economists

question 129

Multiple Choice

When constructing an economic model, economists

• A)rely mostly on their own value judgments and ignore the far more complex world of facts
• B)always try to duplicate reality by including all available information
• C)use assumptions that are true for the individual but never true for the whole economy
• D)must rely on simplifying assumptions that abstract from the complexity of the real world
• E)are primarily concerned with making realistic assumptions

Grasp the accounting treatments for investments in associates and bonds, including amortization and its impact.

Identify the criteria for the classification of investments as current assets and the valuation at fair value.

Analyze the reporting requirements for trading investments, including the treatment of dividends and gains/losses.

Distinguish between different models used for valuing non-strategic investments.

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Definitions:

Allocation Base B

A criterion or standard used to distribute overhead costs among various cost objects.

Step-down Method

A cost allocation method used in accounting to distribute overhead costs to various cost objects based on a hierarchical sequence of allocation bases.

Custodial Services

These are services related to the maintenance and cleaning of buildings and facilities.

Square Feet

A unit of area measurement equal to a square measuring one foot on each side.