Which One of the Following Statements Illustrates a Synergistic Effect

question 290

Multiple Choice

Which one of the following statements illustrates a synergistic effect of a merger?

• A) The revenue of the combined firm is equal to the revenue of the acquiring firm plus the revenue of the target firm.
• B) The costs of the combined firm exceed the costs of the acquiring firm plus the costs of the target firm.
• C) The tax liability of the combined firm is greater than the sum of the tax liabilities of each separate firm.
• D) The depreciation expense of the combined firm is equal to the depreciation expense of the acquiring firm plus the depreciation expense of the target firm.
• E) The capital requirements of the combined firm are less than the sum of the capital requirements of each separate firm.

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Definitions:

Salaries and Wages Expense

The total expense for a company from paying salaries and wages to its employees during a financial period, reflecting the cost of labor.

Salaries and Wages Payable

Liabilities arising from employees' salaries and wages that have been earned but not yet paid.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the correct periods.

Supplies Account

An account that tracks the cost of supplies used or on hand during an accounting period.