A Broad Principle That Requires Identifying the Activities of a Business

question 193

Multiple Choice

A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the:

• A) Time period assumption.
• B) Operating cycle of a business.
• C) Going-concern assumption.
• D) Accrual basis of accounting.
• E) Expense recognition (matching) principle.

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Definitions:

Government Purchases

Involves spending by the government on goods and services that directly contribute to the economy's aggregate demand.

Real GDP

Real Gross Domestic Product, which is the inflation-adjusted measure of the total value of all goods and services produced within a certain time frame.

Price Level

A gauge for the mean cost of products and services across an economy at a given time.

Short-Run Aggregate Supply

Represents the total supply of goods and services that firms in an economy plan on selling during a short time period, based on the current price level.