Statement I: a Price Floor Will Always Have an Effect

question 103

Multiple Choice

Statement I: A price floor will always have an effect on a market.
Statement II: A price ceiling which has been set above equilibrium will cause a shortage.

• A)Statement I is true and statement II is false.
• B)Statement II is true and statement I is false.
• C)Both statements are true.
• D)Both statements are false.

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Definitions:

Total Liabilities

The sum of all financial debts or obligations a company owes, shown on the balance sheet.

Expense Account

An account where business-related expenses are recorded, often used for tracking purposes for budgeting or tax deductions.

Incurred

Expenses, losses, or liabilities that have been suffered or assumed in the course of conducting business.

Matching Principle

An accounting concept that requires expenses to be recorded in the same period as the revenues that are generated as a result of those expenses.