AICPA Exam CPA-Business Topic 2 Question 92 Discussion

Actual exam question for AICPA's CPA-Business exam

Question #: 92
Topic #: 2

[All CPA-Business Questions]

The trough of a business cycle is generally characterized by:

AShortages of essential raw materials and rising costs.

BIncreasing purchasing power and increasing capital investments.

CUnused productive capacity and an unwillingness to risk investments.

DDeclining purchasing power and unused productive capacity.

Show Suggested Answer

Suggested Answer: C

Choice 'c' is correct. Return on investment equals net income divided by average invested capital:

Choices 'a', 'b', and 'd' are incorrect, per the above calculation.

by Georgeanna at Jul 11, 2024, 09:35 PM

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Albina

13 days ago

D seems like the correct answer. Declining purchasing power and unused productive capacity are the hallmarks of a trough.

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Domitila

15 days ago

I think the answer is C. Unused productive capacity and an unwillingness to risk investments definitely sounds like the trough of a business cycle to me.

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Viola

20 days ago

I'm not sure, but I think shortages of essential raw materials and rising costs could also be indicators of a trough.

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Shawna

24 days ago

I agree with Leonida. Declining purchasing power and unused productive capacity are signs of a trough in the business cycle.

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Leonida

25 days ago

I think the trough of a business cycle is characterized by unused productive capacity and an unwillingness to risk investments.

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