Realization Occurs When

question 60

Multiple Choice

Realization occurs when

• A)revenues have been earned
• B)noncash resources are converted to cash or rights to cash
• C)an item is formally recorded in the books
• D)an item is reported in a company's financial statements

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Definitions:

Net Book Value

The total value of a company's assets minus its liabilities and intangible assets, indicating the net worth of the company's tangible assets.

Consolidated Net Income

The combined net income of a parent company and its subsidiaries, factoring in the effects of intercompany transactions.

Equity Method

An accounting technique used for recording investments in associate companies where the investment is initially recorded at cost and subsequently adjusted for the investor’s share of the net profits or losses of the investee.

Consolidation Worksheet Entries

Journal entries used in preparing consolidated financial statements, helping to adjust and eliminate internal transactions between parent and subsidiary entities.