On January 1,Year 1,Mayer Corporation Signed a Contract to Perform $\text { NA } \quad \text { NA } \quad \text { NA } \quad 25,000$

question 40

Multiple Choice

On January 1,Year 1,Mayer Corporation signed a contract to perform $25,000 worth of services for Phips Company over the next three years.Which of the following indicates the effects of this event on the Year 1 income statement and statement of cash flows of Mayer Corporation?
Cash Flows
Net Income Operating Investing Financing

• A) \(\text { NA } \quad \text { NA } \quad \text { NA } \quad 25,000\)
• B) \(25,000 \quad \text { NA } \quad 25,000 \quad \text { NA }\)
• C) \(25,000 \quad 25,000 \quad \text { NA }\quad \text { NA }\)
• D) NA\(\quad\)\(\quad\)NA\(\quad\)\(\quad\)NA\(\quad\)\(\quad\)NA

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Definitions:

Arbitrage

The simultaneous buying and selling of assets in different markets to exploit price differences for profit.

Elasticity of Demand

A gauge for the responsiveness of how much a product is wanted relative to fluctuations in its price.

Inelastic Demand

A market situation where the demand for a product does not significantly change with a change in price.

Elastic Demand

A market condition where the demand for a product or service significantly changes in response to price changes.