In the Circular Flow Model, Profits Are Considered to Be

question 290

Multiple Choice

In the circular flow model, profits are considered to be

• A) a subtraction from the Gross Domestic Product (GDP).
• B) a cost of doing business.
• C) equal to zero, or else the circular flow would be out of balance.
• D) a form of interest payment.

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Definitions:

Debit Side

The left side of a ledger account that records increases in assets and expenses or decreases in liabilities and equity.

Journalizing

A process in accounting that involves recording transactions in a journal before they are transferred to a ledger.

Posting Process

The act of transferring entries from a company's journal to the appropriate accounts in the general ledger.

Balance Errors

Mistakes in the accounting process that lead to discrepancies in the trial balance, often requiring adjustments to correct.