In Consolidated Financial Statements of a Parent and Subsidiaries, an Income

question 55

Multiple Choice

In consolidated financial statements of a parent and subsidiaries, an income tax adjustment is necessary:

• A)For advising Canada Revenues Agency only.
• B)Whenever unrealized profit causes a difference between the carrying amount of an asset and the carrying amount shown in the consolidated financial statements.
• C)Where unrealized profit causes a difference between the carrying amount of an asset or a liability in the records of the legal entity only.
• D)All of the above.

Identify the steps in the accounting cycle and their sequence.

Recognize the importance of current liabilities and assets and how they are reported.

Understand the concept of the current ratio and its significance in assessing a company’s liquidity.

Acknowledge the role and preparation of adjusting entries in the accounting process.

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Definitions:

Relative Cheaper

The comparison of the cost of one product or service to another, indicating that the former is less expensive.

Labor-Intensive

Describing a process or industry that requires a large amount of labor to produce its goods or services.

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than its competitors, which enhances efficiency in international trade.

Production Possibilities

A curve or frontier representing the maximum combination of goods and services that can be produced efficiently with available resources and technology.