Thinking That Applies a General Set of Rules to Specific

question 332

Multiple Choice

Thinking that applies a general set of rules to specific situations, for example, using the laws of gravity to predict the behavior of a single falling object, is referred to as __________ thought.

• A)deductive
• B)inductive
• C)intuitive
• D)creative

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Definitions:

Consolidated Net Income

The combined net income of a parent company and its subsidiaries, factoring in the effects of intercompany transactions.

Equity Method

An accounting technique used for recording investments in associate companies where the investment is initially recorded at cost and subsequently adjusted for the investor’s share of the net profits or losses of the investee.

Consolidation Worksheet Entries

Journal entries used in preparing consolidated financial statements, helping to adjust and eliminate internal transactions between parent and subsidiary entities.

Fair Value

An estimate of the price at which an asset or liability could be exchanged in a current transaction between willing parties.