Use the Following Situation to Answer the Question : Situation

question 27

Multiple Choice

Use the following Situation to answer the question : situation 20-1
Assume a closed economy with no government. Suppose that autonomous consumption equals $400, planned investment equals $500, and the mpc equals 0.9.

-Using the information in Situation 20-1,if aggregate output is equal to $10,000,then unplanned inventory investment equals

• A)-$1,000.
• B)-$100.
• C)$0.
• D)$100.

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Definitions:

Unrecorded Expense

A cost or liability that has been incurred but not yet documented or included in the financial records or statements of a company.

Unrecorded Revenue

Earnings from completed transactions or delivered goods/services that have not yet been documented in the financial accounts.

GAAP

Generally Accepted Accounting Principles, which are a common set of accounting rules and standards used in the United States for financial reporting.

Accrual Basis

An accounting method where revenues and expenses are recorded when they are earned or incurred, regardless of when the cash transactions occur.