When a Company Owns More Than 50% of the Common

question 148

Multiple Choice

When a company owns more than 50% of the common stock of another company

• A) consolidated financial statements are usually prepared.
• B) the cost method of accounting is used.
• C) they are referred to as the subsidiary.
• D) they recognize revenue when dividends are received.

---

Definitions:

Mutual Adjustment

A process of coordinating actions and decisions through informal communication and negotiation among parties.

Support Staff

Employees who provide administrative or technical support to an organization, enabling primary operations without being directly involved.

Formalization

The extent to which organizations use rules, procedures, and structured communication to govern behaviors and operations.

Centralization

The concentration of decision-making authority at higher levels within an organization.