Which of the Following Type of Gains and Losses Arises

question 47

Multiple Choice

Which of the following type of gains and losses arises purely because of the change in the general price level during a period?

• A) Monetary holding gains and losses
• B) Real holding gains and losses
• C) All holding gains and losses
• D) Unrealized gains and losses

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Definitions:

Perpetual Inventory System

An accounting method that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

Purchases Account

A ledger account in which the total amount of goods purchased during a period is recorded.

Current Cost Accounting System

An accounting approach that records assets and liabilities at their current market value instead of their historical cost.

Unrealized Holding Gains

Increases in the value of assets that an entity holds but has not yet sold, and thus are not reflected in the income statement until sold.