If Wanda's Income Is Reduced to Zero After She Loses

question 145

Multiple Choice

If Wanda's income is reduced to zero after she loses her job, her consumption will be ________ and her saving will be ________.

• A) less than zero; less than zero
• B) greater than zero; greater than zero
• C) less than zero; greater than zero
• D) greater than zero; less than zero

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Definitions:

Receipt of Cash

This refers to the actual inflow of cash into a business, resulting from transactions such as cash sales, receiving payment from debtors, or any other cash receipts.

Warranty Accrual Method

An accounting approach that recognizes the estimated cost of fulfilling product warranties as an expense when the related sales occur.

Warranty Costs

Expenses incurred by a company to repair, replace, or refund products that are found to be defective within the warranty period.

Sales

The total revenue generated from the sale of goods or services by a company during a specific period.