The Variation in the Rate of Return One Can Expect

question 222

Multiple Choice

The variation in the rate of return one can expect from ownership of stocks will generally be smaller if

• A) all of the funds are invested in a specific sector of the economy such as the automobile industry.
• B) a diverse set of stocks is held over a lengthy period of time such as 30 or 40 years.
• C) all of the funds are invested in a single stock.
• D) the funds are invested for a relatively short period of time.

Determine the effects of business combinations on consolidated cash, receivables, inventory, equipment, buildings, long-term liabilities, and retained earnings.

Evaluate and record stock issuance and related costs in business combination transactions.

Understand the treatment and impact of additional paid-in capital in business combinations.

Prepare journal entries to record business combination transactions, including stock issuance and payment of combination costs.