Skip to content

ACCA Applied Knowledge · Management Accounting · Summarising and analysing data

Which statement about a weighted index number is correct?

A Laspeyres price index uses base period quantities as weights. This means the quantity data need not be updated each period, whereas a Paasche index uses current period quantities and therefore reflects present buying patterns.

  1. AWeights are ignored so that each item counts equally
  2. BA Laspeyres price index uses current period quantities as weights
  3. CA Paasche price index uses base period quantities as weights
  4. DA Laspeyres price index uses base period quantities as weightsCorrect

Explanation

Laspeyres uses base period quantities as weights, so it needs no new quantity data each period. Paasche uses current period quantities, so the two options that swap these are wrong. Weighting exists precisely so that items do not count equally.

Did you get it right without looking?

One question tells you little. A timed set on Summarising and analysing data shows your real accuracy, how long you take and where you lose marks.

Practise Summarising and analysing dataFree diagnostic mock

More Summarising and analysing data questions