Z Company Acquired a Subsidiary Several Years Ago That Was

question 58

Multiple Choice

Z Company acquired a subsidiary several years ago that was appropriately excluded from consolidation last year. This year Z has consolidated the subsidiary in its financial statements. This results in:

• A) An accounting change that should be reported prospectively.
• B) A correction of an error.
• C) An accounting change that should be reported by restating the financial statements of all prior periods presented.
• D) Neither an accounting change nor a correction of an error.

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Definitions:

NSF Check

A check that cannot be processed due to insufficient funds in the account it's drawn against, resulting in a non-sufficient funds status.

Debit Memo

A document issued by a buyer to a seller indicating a debit made in the seller's account, often due to returns, allowances, or discrepancies in billing.

Bank Reconciliation

Bank reconciliation is the process of matching and comparing the balances in an entity’s accounting records for a cash account to the corresponding information on a bank statement.

Deposits In Transit

Refers to cash and checks that have been received and recorded by an entity but have not yet been deposited in the bank account.