Value Added Is Equal to the Value of a Firm's

question 28

Multiple Choice

Value added is equal to the value of a firm's production minus

• A) all of its costs of production.
• B) labor costs.
• C) investment expenditures.
• D) intermediate goods used in production.

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Definitions:

Gross Amount

The total sum before any deductions are made, such as taxes or discounts.

Merchandise

Merchandise encompasses the goods and products that a retail business purchases to then sell to its customers.

Lower of Cost

An accounting principle requiring that inventory be recorded at the lower of its historical cost or market value if the market value drops below cost.

Net Realizable Value

The estimated selling price in the ordinary course of business, minus the estimated costs of completion and the estimated costs necessary to make the sale.