If a Company Is Very Diversified

question 39

Multiple Choice

If a company is very diversified

• A)it makes it easier to classify the company by industry.
• B)it would not be necessary to provide any segmented information.
• C)it can limit the usefulness of financial analysis.
• D)any problems with a subsidiary would be apparent when examining the consolidated statements.

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Definitions:

Allocate Expenses

The process of assigning costs to specific cost centers or accounts based on their usage or benefit received.

Royalties

Payments made to the owners of intellectual property, such as patents, copyrights, and trademarks, usually based on a percentage of revenue generated from their use.

Schedule K-1

Schedule K-1 is a tax form used in the United States to report an individual's share of income, deductions, and credits from partnerships, S corporations, or trusts.

Schedule C

A tax form used by sole proprietors to report profit or loss from a business, detailing income, expenses, and net profit.