A Joint Venture Can Add Significant Potential Liabilities to the Parent

question 45

True/False

A joint venture can add significant potential liabilities to the parent company that are not on the face of the balance sheet.

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Definitions:

Raw Material Needs

The quantity and type of raw materials required for a company to manufacture its products.

Beginning Inventory

The value of goods available for sale or use at the start of an accounting period.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting the cost of goods sold.

End-of-Month Inventory

The valuation of all unsold goods, raw materials, and work-in-progress held by a company at the end of the month.