The Basic Methods Used in Combining Financial Accounts in a Merger

question 27

Multiple Choice

The basic methods used in combining financial accounts in a merger include all of the following except the

• A)goodwill consolidation method
• B)purchase method
• C)pooling of interests method
• D)book value method

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Definitions:

Accounting Equation

The foundational principle of accounting representing the relationship between a company’s assets, liabilities, and equity: Assets = Liabilities + Equity.

Vehicle

A means of transportation, such as a car, truck, motorcycle, or bicycle, that facilitates the movement of people or goods from one place to another.

Credit

Credit refers to the trust which allows one party to provide resources to another party wherein the second party does not reimburse the first party immediately but promises either to repay or return those resources at a later date.

Owner Withdrew

A transaction where the business owner takes out funds from the business for personal use, often recorded as a reduction in owner's equity.