Use the Following to Answer Questions

question 53

Multiple Choice

Use the following to answer questions:
Scenario: Price Index
Suppose that in the base period a college student buys 20 gallons of gasoline at $2 per gallon, 2 CDs for $13 each, and 4 movie tickets for $7 each. In the next month, the price of gasoline is $2.25 per gallon, CDs cost $12.50 each, and the price of a movie ticket is $7.50.
-(Scenario: Price Index) Look at the scenario Price Index. The change in prices from the first to the second month is:

• A)1.1%.
• B)94%.
• C)6.4%.
• D)-6%.

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Definitions:

Comparative Balance Sheet

A comparative balance sheet presents the financial position of a company at two or more different points in time, allowing for analysis of trends and changes in assets, liabilities, and equity.

Horizontal Analysis

A financial analysis technique that compares line items in financial statements over a series of periods to identify trends and growth patterns.

Quick Ratio

The quick ratio, also known as the acid-test ratio, is a measure of a company's ability to meet its short-term obligations using its most liquid assets, excluding inventory.

Current Ratio

A financial ratio indicating how well a company can cover its short-term debts with assets that can be quickly converted into cash within a year.