Corporations Invest in Other Companies for All of the Following

question 103

Multiple Choice

Corporations invest in other companies for all of the following reasons except to

• A) house excess cash until needed.
• B) generate earnings.
• C) meet strategic goals.
• D) increase trading of the other companies' stock.

Calculate and record the effect of freight charges on merchandise purchases.

Explain the role and importance of subsidiary ledgers and control accounts in accounting.

Recognize the procedures and documentation for purchasing, receiving, and payment approval within the accounting system.

Understand how discounts, returns, and allowances are recorded and their impact on accounting.

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Definitions:

Direct Method

A cash flow statement presentation that itemizes the major categories of gross cash receipts and payments, providing a clearer view of a company's cash flow from operating activities.

Ending Inventory

The total value of a company's merchandise, raw materials, work-in-progress, and finished goods at the end of an accounting period.

Ceiling Constraint

In accounting, the maximum value that inventory can be reported at, ensuring that assets are not overstated.

Floor Constraint

A limitation in inventory accounting that prevents the value of inventory from being reported below a certain level.