When a Company Owns More Than 50% of the Common

question 172

Multiple Choice

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

• A) affiliated financial statements are prepared.
• B) consolidated financial statements are prepared.
• C) controlling financial statements are prepared.
• D) significant financial statements are prepared.

---

Definitions:

Reversing Entries

Journal entries made at the beginning of an accounting period to reverse or cancel out adjusting entries from the end of the previous period.

Adjusting Entries

These are journal entries made in an accounting period to allocate income and expenditures to the period in which they actually occurred.

Journalize Transactions

The process of recording financial transactions in the journal as part of the accounting cycle.

Analyze Transactions

The process of examining financial transactions to understand their nature, how they affect the accounts, and how they should be recorded in the accounting system.