Walsh Company Sells Inventory to Its Subsidiary, Fisher Company, at a Profit

question 51

Multiple Choice

Walsh Company sells inventory to its subsidiary, Fisher Company, at a profit during 2020. With respect to one-third of the inventory sold to Fisher, Walsh accounts for it using the equity method of accounting.In the consolidation worksheet for 2020, which of the following accounts would be debited to eliminate the intra-entity transfer of inventory?

• A) Retained earnings.
• B) Cost of goods sold.
• C) Inventory.
• D) Investment in Fisher Company.
• E) Sales.

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Definitions:

False Alarm

An event where a warning or indication of danger is given, but no actual threat exists.

Target

An object or goal that one aims to reach or achieve, often used in the context of objectives, benchmarks, or physical marks aimed at in shooting or throwing.

Signal-Detection Analysis

A statistical method used to determine the ability to differentiate between information-bearing patterns and random patterns that distract from the information.

Sensitive

Sensitive refers to the ability to perceive or feel things deeply or to respond quickly to stimuli, often associated with acute physical or emotional sensitivity.