National Income Accounting Test

Result

National Income Accounting Test - 21

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Weekly Quiz Competition

Question 1
1 / -0

Losses are classified as ______________.

A
Stock variable

B
Flow variable

C
Either a or b

D
Neither a nor b

Solution

Losses are classified as a flow variable since it is measured over a specified period of time. It is time dimensional as it is generally measured over a year.
Question 2
1 / -0

Which of the following flowchart correctly establishes the treatment of 'Depreciation'?

A

B

C

D

Solution

Flowchart A correctly establishes the treatment of 'Depreciation'. Depreciation refers to loss of the value of fixed assets mainly due to wear and tear and expected obsolescence.
Formula: Gross - Depreciation = Net
or, Net + Depreciation = Gross.
Question 3
1 / -0

Which of the following is a stock?

A
Wealth

B
Saving

C
Exports

D
Profits

Solution

Wealth is a stock. Wealth falls under the stock concept since it relates to a point of time. Wealth is not time dimensional. Wealth is not related to a period of time like flow.
Question 4
1 / -0

Sugar purchased by a Sweet shop is an ______ good, while it is a _______ good when it is purchased by a consumer.

A
capital, final

B
final, intermediate

C
intermediate, final

D
final, producer

Solution

Sugar purchased by a Sweet shop is an intermediate good, while it is a final good when it is purchased by a consumer as sugar purchased by a sweet shop is used as a raw material and goods used for raw material are classified as intermediate goods as value is yet to be added, while, sugar purchased by a consumer is a final good as it is directly consumed and no value is yet to be added.
Question 5
1 / -0

Depreciation of fixed capital assets refers to _______________.

A
Normal wear and tear

B
Foreseen obsolescence

C
Normal wear & tear & foreseen obsolescence

D
Unforeseen obsolescence

Solution

Depreciation of fixed capital assets refers to normal wear and tear and foreseen obsolescence. Depreciation is also called consumption of fixed capital. Loss of fixed assets happen on account of normal wear and tear, normal rate of accidental damages and expected obsolescence.
Question 6
1 / -0

Goods purchased for the following purpose are final goods ________________.

A
For satisfaction of wants

B
For investment in firm

C
Both (a) and (b)

D
None of the above

Solution

Goods purchased for the following purpose are final goods:
a) For satisfaction of wants
b) For investment in firm
Final goods are those goods which crossed the boundary of production and are ready to use by their final users, Final goods must lead to either final consumption expenditure or investment expenditure in the economy.
Question 7
1 / -0

Unforeseen obsolescence of fixed capital assets during production is ________________.

A
Consumption of Fixed Capital

B
Capital Loss

C
Income Loss

D
None of the above

Solution

Unforeseen obsolescence of fixed capital assets during production is capital loss. Unforeseen obsolescence which may happen due to natural calamity is not taken into account while calculating depreciation and hence, it causes capital loss.
Question 8
1 / -0

Foreign embassies in India are a part of India's _______________.

A
Economic territory

B
Geographical territory

C
Both (a) and (b)

D
None of the above

Solution

Foreign embassies in India are a part of India's geographical territory and not economic territory. For example: Embassy of USA in India is a part of domestic territory of USA and a part of geographical territory of India.
Question 9
1 / -0

Which of the following is a flow?

A
Deposits in a bank

B
Capital

C
Depreciation

D
Wealth

Solution

Depreciation is a flow since it is measured over a specified period of time. It is time dimensional as it is generally measured over a year.
Question 10
1 / -0

Circular Flow of Income is correctly represented in the diagram:

A

B

C

D

Solution

Diagram A represents te circular flow of income correctly.
Circular flow of income is constituted by money flow and real flow:
a) Money flow refers to the flow of money in terms of receipts and payments across different sectors of the economy. Flow of factor payments by producer sector to the household sector or flow of money from household sector to producer sector on account of the purchase of goods and services for consumption are examples of money flows.
b) Real flow refers to the flow of goods and services across different sectors of the economy. Flow of factor services from household sector to the producer sector or flow of goods and services from producer sector to household sector are examples of real flows.