Adam IncUses a Perpetual Inventory System

question 164

Multiple Choice

Adam Inc.uses a perpetual inventory system. If Adam uses the FIFO method,how much is cost of goods sold for the month of January?

• A)$204
• B)$208
• C)$212
• D)$560

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Definitions:

Self-correcting Economy

An economy that possesses mechanisms to automatically adjust itself to balance out recessions or inflations without external intervention.

Recessionary Gap

The difference between the actual output of an economy and its potential output if all resources were fully employed, indicating underperformance.

Expansionary Gap

A situation in an economy where total spending exceeds the production capacity, leading to inflationary pressures and a rise in output.

Effectiveness Lag

The time needed for changes in monetary or fiscal policy to affect the economy