Propinquity Is a Factor That Is Related to the Power

question 48

Multiple Choice

Propinquity is a factor that is related to the power of a reference group. How will it influence the relative power between a membership group and an avoidance group?

• A) Propinquity should make membership groups much stronger than avoidance groups.
• B) Propinquity should make membership groups and avoidance groups equal in potential power.
• C) Propinquity should make membership groups weaker than avoidance groups because the motivation to distance oneself is increased with closeness.
• D) Propinquity will have no influence on either membership groups or avoidance groups.

Understand the principles and methods of accounting for acquisitions and business combinations, including the acquisition method.

Describe the process and calculations involved in the preparation of consolidation worksheets following an acquisition.

Identify and calculate goodwill and its impairment, including the recognition and measurement principles under US GAAP.

Understand the equity method of accounting for investments and its impact on consolidated financial statements.

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Definitions:

Return on Investment

A measure of the profitability of an investment, calculated as the net gain or loss of the investment divided by its initial cost.

Departmental Contribution

The amount of income earned by a specific department after direct costs associated with the department have been subtracted.

Overhead

The ongoing administrative, general, and maintenance expenses incurred during the production process, not including direct labor or materials costs.

Profit Centers

Parts of an organization that are responsible for generating revenue and evaluated based on their profitability.