How Can Owning a Minority Interest in Another Firm Benefit

question 44

Multiple Choice

How can owning a minority interest in another firm benefit the firm that owns the minority interest.

• A)Owning a minority interest in a firm does not cost as much as acquiring a controlling interest,but the minority interest gives the firm owning a minority interest some input into the operation of the firm in which it owns a minority interest.
• B)Owning a minority interest in a firm gives the firm owning the minority interest the first right of refusal to increase its ownership to a controlling interest.
• C)Owning a minority interest in a firm gives the firm owning the minority interest the opportunity to control the election of directors and thereby control the firm.
• D)Owning a minority interest in a firm gives the firm owning the minority interest enough control to merge with any firm other than the firm owning a minority interest.

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Definitions:

Fraud

The intentional deception made for personal gain or to damage another individual or entity.

Journalizing

The process of recording financial transactions in the accounting journal.

Journal

A basic accounting record where all the financial transactions of a business are initially recorded in chronological order before being posted to accounts in the ledger.

Liability Accounts

Accounts on a balance sheet representing what a company owes to others, including loans, mortgages, and accounts payable.