With the Periodic Inventory System What Does the Opening Balance

question 59

Multiple Choice

With the periodic inventory system what does the opening balance in the inventory account represent?

• A) Inventory on hand at the end of the previous period as determined by a physical stocktake.
• B) Inventory on hand at the end of the current period as determined by a physical stocktake.
• C) Opening inventory plus purchases less ending inventory.
• D) Inventory on hand at the end of the current period before allowance for inventory variance.

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Definitions:

Simple Spending Multiplier

A formula used in economics to determine the impact of a change in autonomous spending on the aggregate output, highlighting the amplification of initial spending through the economy.

Marginal Propensity

The ratio of change in an economic variable (such as consumption or saving) in response to a change in another (such as income), indicating the responsiveness of the variable.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, often used to measure inflation.

Aggregate Expenditure Line

A graphical representation that shows the total planned expenditure at various levels of national income.