Which of the Following Statements Is TRUE About Income and Wealth

question 155

Multiple Choice

Which of the following statements is TRUE about income and wealth?

• A) Income is a flow measure and wealth is a stock measure.
• B) Income is a stock measure and wealth is a flow measure.
• C) Both income and wealth are flow measures.
• D) Both income and wealth are stock measures.

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Definitions:

Sales Revenues

The total income generated from the sale of goods and services by a company before any costs or expenses are deducted.

Cash Operating Expenses

Expenses incurred during the operational activities of a business that affect cash flow, such as paying salaries and purchasing materials.

Simple Rate Of Return

A financial ratio used to calculate the profit an investment will generate, expressed as a percentage of the initial cost.

After-Tax Discount Rate

The rate used to discount future cash flows to their present value after accounting for the effects of taxes.