At the Onset of the Recent Economic Slowdown, Prices at the Grocery

question 272

Multiple Choice

At the onset of the recent economic slowdown, prices at the grocery stores continued to rise. In some cases, products such as milk and bread almost doubled in price. A Boston newspaper reported, "The price of eggs was up 40% and milk was up 26%." Consumers were already being hit with high energy costs, and now their confidence in the economy was further shaken with job cuts and a loss of discretionary income due to increases in food prices. The economy was slowing, but prices were rising, signifying the potential for ___________.

• A) deflation
• B) stagflation
• C) disinflation
• D) equalization

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Definitions:

Straight Line Basis

A method of calculating depreciation and amortization that allocates an equal portion of an asset's cost to each period in its useful life.

Salvage Value

The estimated value that an asset will realize upon its sale at the end of its useful life.

Payroll Accrual

The process of recording salaries and wages that have been earned by employees but not yet paid by the company.

Books Closed

A term referring to the point at which an accounting period is concluded and all financial statements are finalized.