An Upstream Sale of Inventory Is a Sale

question 46

Multiple Choice

An upstream sale of inventory is a sale:

• A) Between subsidiaries owned by a common parent.
• B) With the transfer of goods scheduled by contract to occur on a specified future date.
• C) In which the goods are physically transported by boat from a subsidiary to its parent.
• D) Made by the investor to the investee.
• E) Made by the investee to the investor.

---

Definitions:

Corporate Investors

Organizations that invest in other companies’ securities, often for strategic purposes beyond mere financial gain.

Low-Dividend Policy

A low-dividend policy is a corporate strategy where a company decides to retain a larger portion of earnings for reinvestment rather than distributing it to shareholders as dividends.

New Equity Sales

The process of selling new shares of a company to investors to raise capital.

Residual Policy

A financial strategy where dividends are paid to shareholders from the remaining or residual net income after all operating and expansion expenses.