Consider the Following Information About the Price and the Price

question 48

Multiple Choice

Consider the following information about the price and the price index of a popular book over three years. If the price index in 2011 was 95 instead of 111.11,it would imply that _______________________________________.

• A) the price of the book in 2011 was 16.11% lower than its price in 2009
• B) 2011 would be considered as the base year
• C) the price of the book in 2011 was 5% lower than its price in 2009
• D) the price of the book in 2011 would be $4

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Definitions:

Allowance for Doubtful Accounts

An accounting provision representing the estimated amount of receivables that may not be collected, reducing the accounts receivable balance to its net realizable value.

Net Realizable Value

The estimated selling price of goods, minus the costs of their sale or disposal, used in valuing inventory and accounts receivable for financial reporting.

Write-Off

A write-off involves removing an asset from the financial statements because it is no longer collectible or has no value.

Bank Reconciliation

Bank reconciliation involves the process of matching and comparing the account balance in an entity's financial records to the corresponding information on a bank statement, to ensure accuracy and consistency.