A Horizontal Merger

question 42

Multiple Choice

A horizontal merger

• A) combines similar firms that serve separate markets.
• B) combines firms that produce similar products.
• C) enables a company to control each stage of the production process: from raw materials to the final marketing of the product.
• D) enables similar firms to form a cartel.

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Definitions:

Operating Profit

A measure of profit that reflects the income earned from the business’s core operations, excluding any costs and revenues from non-operating activities.

Operating Segments

Components of an enterprise that engage in business activities earning revenues and incurring expenses, including revenues and expenses related to transactions with other components of the same enterprise.

LIFO Method

An inventory valuation method that assumes the last items placed in inventory are the first sold during an accounting period, known as Last-In, First-Out.

FIFO Method

An inventory valuation method (First In, First Out) where the oldest items of inventory are recorded as sold first, with costs of the earliest goods purchased being the first to be recognized in determining cost of sales.