Rachel Ltd Provided an Advance of $100 000 to Its

question 38

Multiple Choice

Rachel Ltd provided an advance of $100 000 to its subsidiary Marion Ltd. Interest of $10 000 was charged during the year ended 30 June 2021. On consolidation, the following adjustment is needed at 30 June 2021 in relation to the interest charged:

• A) no adjustment needed.
• B) DR Interest expense $10 000 CR Interest revenue $10 000
• C) DR Retained earnings $10 000 CR Cash $10 000
• D) DR Interest revenue $10 000 CR Interest expense $10 000

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Definitions:

Protectionist Policies

Economic policies designed to restrict international trade to protect domestic industries from foreign competition.

Domestic Surplus

The extra quantity of a good that producers are willing to supply over what is demanded by domestic consumers, often measured when analyzing the impact of international trade.

Tariffs

Taxes on imported goods, implemented by a government to protect domestic industries from foreign competition or to generate revenue.

Textiles

Materials made from fibers, filaments, threads, or yarns, suitable for use in the production of fabrics and other goods.