An Integrated REA Diagram Merges Multiple Copies of Some Entities

question 73

Multiple Choice

An integrated REA diagram merges multiple copies of some entities in order to

• A)minimize the repetition of agent entities.
• B)maximize the legibility of the diagram by avoiding the need to have relationship lines cross one another.
• C)keep the diagram less complex.
• D)maintain a clear representation of the activities that are represented by the diagram.

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Definitions:

Equity Method

An accounting technique used for recording investments in associate companies where the investment is initially recognized and subsequently adjusted for the investor’s share of the net assets of the investee, including recognized income or loss.

Cost Method

An accounting method used to record investments in which the investment is recorded at its acquisition cost without recognizing subsequent changes in market value.

Investment Method

A technique for recognizing the investor's share of investee profits and adjusting the carrying amount of the investment accordingly.

Accounting

The systematic process of recording, summarizing, and reporting the financial transactions and positions of a company.