Question

Hillary makes two transactions while at the mall: • She returns an item to get $15 back at one store. • She buys an item for $15 at another store. Which is a correct description of the two quantities that represent these transactions? A The quantities have the same magnitude, but different signs. B The quantities have the same sign, but different magnitudes. C The quantities have different magnitudes and different signs. D The quantities have both the same magnitude and the same sign.

Answer 1

A. The quantities have the same magnitude, but different signs.

Explanation:

You want a description of the quantities representing a $15 return and a $15 purchase.

Sign

When accounting for monetary transactions, we generally give a negative sign to a value that reduces our assets, and a positive sign to a value that increases our assets.

When Hillary returns an item to get a $15 refund, her monetary assets are increased by $15. That transaction can be given a positive sign.

When Hillary spends $15 to purchase an item, her monetary assets are reduced by $15. That transaction can be given a negative sign.

We can describe the quantities as ...

A. The quantities have the same magnitude, but different signs.

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Additional comment

To the extent that the goods returned or purchased can be traded for cash, each represents an asset in its own right. What Hillary has done is trade a physical asset for a monetary one (or vice versa) in each transaction.

When accounting for Hillary's net worth, both monetary and physical assets can be counted, hence each of these transactions has no net effect on Hillary's net worth. The sign of the value of the transaction will depend on whether you are accounting for cash or for physical assets.

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