When Money Is Used as a Medium of Exchange

question 86

Multiple Choice

When money is used as a medium of exchange

• A) the need for a barter system diminishes.
• B) the cost of transactions increases.
• C) the need for a banking system in the economy decreases.
• D) it reduces the number of transactions in the economy.

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Definitions:

LIFO Method

"Last In, First Out," an inventory costing method where the most recently produced or purchased items are recorded as sold first.

Year-End Inventory

The total value of a company's merchandise, raw materials, and finished and unfinished products which have not yet been sold, at the end of the fiscal year.

Inventory Turnover Ratio

A measure of how often a company sells and replaces its stock of goods within a period, calculated as cost of goods sold divided by average inventory.

Customer Refunds Payable

A liability account for estimated refunds and allowances that will be paid or granted to customers in the future.