In Calculating the CPI,a Fixed Basket of Goods and Services

question 168

Multiple Choice

In calculating the CPI,a fixed basket of goods and services is used.The quantities of the goods and services in the fixed basket are determined by

• A)surveying consumers.
• B)surveying sellers of the goods and services.
• C)working backward from the rate of inflation to arrive at imputed values for those quantities.
• D)arbitrary choices made by federal government employees.

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Definitions:

Deferred Revenue

Income received by a company for goods or services yet to be delivered or performed; it is recorded as a liability on the balance sheet until the transaction is completed.

Accrued Revenue

Revenue that has been earned but not yet received or recorded at the end of an accounting period.

Adjusting

The process of making entries to update internal accounts for events that have transpired but are not yet recorded at the end of an accounting period.

Cash Basis

An accounting method where revenues are recognized when cash is received, and expenses are recorded when cash is paid out.