The Consistency Concept

question 165

Multiple Choice

The consistency concept:

• A) Is also called the full disclosure principle.
• B) Is also called the matching principle.
• C) Requires a company to use one method of inventory valuation exclusively.
• D) Prescribes a company use the same accounting method of inventory valuation, an exception being when a change from one method to another will improve its financial reporting.
• E) Requires that all companies in the same industry use the same accounting methods of inventory valuation.

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Definitions:

Demand for Money

The desire or need by individuals and businesses to hold liquid assets, primarily currency and demand deposits, for transactional, precautionary, and speculative purposes.

Nominal GDP

Nominal Gross Domestic Product refers to the market value of all final goods and services produced within a country in a given period, measured in current market prices.

Expansionary Monetary Policy

A monetary policy strategy used by central banks to increase the money supply to stimulate economic growth, typically by lowering interest rates.

Aggregate Expenditure

The total spending on final goods and services in an economy over a specific time period, including consumption, investment, government purchases, and net exports.