Match Each Definition with the Correct Term Below

question 108

Multiple Choice

Match each definition with the correct term below.
-Equity method

• A)Debt or equity securities bought and held principally for the purpose of being sold in the near term.
• B)The method of accounting for the ownership of more than 20 percent of another company's voting stock.
• C)Debt or equity securities that do not meet the criteria for either trading or held-to-maturity securities.
• D)A single set of financial statements for both the parent company and the subsidiary company.
• E)Companies that have expanded by establishing or buying foreign subsidiaries.
• F)The method of recording available-for-sale securities that initially records securities at cost and thereafter periodically adjusts for changes in market value by using an allowance account.
• G)The currency in which the consolidated financial statements are presented.
• H)Debt securities that management intends to hold until their maturity date.
• I)The investing company in a parent-subsidiary relationship.
• J)Making use of inside information for personal gain.

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Definitions:

Carrying Value

The original cost of an asset or liability adjusted for depreciation, amortization, or impairment, reflecting its current book value.

Journal Entry

A record in the accounting ledger that shows a business transaction, involving a debit to one or more accounts and a credit to another to balance.

Consolidated Financial Statements

Financial reports that display the economic condition, operational outcomes, and cash movements of a parent company and its subsidiary companies as one consolidated entity.

Pooling-of-interests Method

A merger accounting method where the assets and liabilities of merging companies are combined using their book values.