Question

the difference between demand-pull and cost-push Explain inflation.

Financial accounting is concerned primarily with Select one: A. product design and marketing strategies O B. providing information for strategic and tactical decisions C. external reporting to investors, creditors, and government authorities D. cost planning and cost gantrols

Answer 1

Difference between Cost Push inflation and Demand Pull inflation Demand Pull Inflation When aggregate demand rise rapidly than supply of the product, it leads to Demand Pull inflation. This leads to rise in the prices and increase the profit. Due to higher consumption, change in taste of consumer demand can rise. Due to government policies to boost the export and to control the imports may lead to extra demands of contry made products than imported products. Cost Push Inflation It is decrease in supply as compared to demand due to increase in cost of production. Increase in the material prices or labor rates or in taxes or other increase in important costs relating to production leads to cost push inflation. It is temporary in nature. Financial accounting is concerned primarily with answer: external reporting to investors, creditors, and government authorities For internal costing and managerial decision making purpose, generally managerial accounting is preferred. For external reporting to stake holders, financial accounting is useful. Which is True? Answer: There is a cause and effect relationship between the cost driver and the amount of cost. Cost drivers are the reason of incurring the cost. Increase in the number of cost driver used, will increase the cost. Allocation of cost can be done more systamatically using the proportion of cost drivers used.