The Present Value and Future Value Concepts Are Applied to Measure

question 102

Essay

The present value and future value concepts are applied to measure the amount of several accounts common in accounting.What are some accounts that are valued in this manner?

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Definitions:

Price Floor

A government-imposed minimum price charged for a good or service, intended to prevent prices from falling below a certain level to protect producers or market sectors.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service versus the amount they actually receive in the market.

Equilibrium Price

The equilibrium price is the price at which the quantity of a good or service demanded equals the quantity supplied, leading to market balance.

Consumer Surplus

The contrast between the full amount consumers are willing to disburse for a product or service and the actual disbursement.