When We Compare PAE and Actual Output (Y) If PAE

question 65

Multiple Choice

When we compare PAE and actual output (Y) if PAE is greater than Y we expect that:

• A) inventories to increase.
• B) inventories to decrease.
• C) there will be no change in inventories.
• D) the government will spend more than it has collected in taxes.

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Definitions:

Scrap Value

The estimated resale value of an asset at the end of its useful life, often considered when assessing depreciation for accounting purposes.

Units-Of-Production Method

An accounting method for depreciation that allocates expense based on the actual usage or production levels of assets.

Scrap Value

The estimated value at which an asset can be sold after it is no longer useful for production, generally at the end of its depreciable life.

Units-Of-Production Method

A depreciation method that allocates the cost of an asset over its useful life based on the number of units it produces.