Giant Uses the Equity Method to Account for the Operations

question 5

True/False

Giant uses the equity method to account for the operations of its 40% owned subsidiary Little. A portion of Little's profits for the year are included in Giant's GAAP book income.

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Definitions:

Participative Budgeting

A budgeting process where employees at various levels of an organization are involved in the budgeting decision-making process.

Bottom-Up Budgeting

A budgeting approach that starts at the departmental or project level, with expenses and needs being identified from the bottom up, and then consolidated and reviewed at higher levels of management.

Top-Down Budgeting

A budgeting approach where the budget is created at the organization's highest level and then distributed down to departments or units.

Direct Material

Raw materials that are directly used in the manufacturing of a product and can be directly attributed to that product.