You Hire Some of Your Friends to Help You Move

question 25

Multiple Choice

You hire some of your friends to help you move to a new house.You pay them a total of $200 and buy them dinner at Pizza Hut.Which of the following is true?

• A)The $200 should be counted as part of GDP but not the dinner at Pizza Hut.
• B)If your friends do not report the $200 on their tax forms,it becomes part of the underground economy.
• C)The dinner at Pizza Hut should be counted as part of GDP,but not the $200.
• D)Hiring your friends is an illegal activity and should not be counted in GDP.
• E)Neither the $200 nor the dinner should be counted in GDP because both are household production.

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Definitions:

Accounts

Records that summarize financial transactions pertaining to a business entity’s assets, liabilities, equity, revenues, and expenses.

Increases and Decreases

Terms used to describe the upward and downward movements in financial and non-financial metrics within business operations.

T Account

The simplest form of an account.

Debit

An accounting entry that represents an increase in assets or expenses, or a decrease in liabilities, equity, or revenue.