Which One of the Following Is a Step Used in Assessing

question 2

Multiple Choice

Which one of the following is a step used in assessing whether or not to invest in a particular company?

• A)Determine the number of employees a company has.
• B)Obtain an understanding of the company and its industry.
• C)Determine the number of years the company has been in business.
• D)Calculate the amount of advertising costs incurred by the company during the previous year.

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Definitions:

Consolidated Financial Statements

Financial statements that aggregate the financials of a parent company with those of its subsidiaries.

Relevant Activities

Activities of the investee that significantly affect the investee’s returns.

Investee's Returns

Refers to the earnings gained from the investment in another entity, including dividends and value appreciation.

Single Economic Entity

A concept where a parent company and its subsidiaries are presented as one reporting entity in consolidated financial statements, ignoring the legal boundary that separates them.