Teckel Enterprises Owns 100% of Dachsund Limited

question 44

Multiple Choice

Teckel Enterprises owns 100% of Dachsund Limited. At the beginning of the fiscal year, there was a profit in Teckel Enterprises inventory of $15,000 on goods acquired from Dachsund Limited in the previous period. The tax rate is 40%. What is the required consolidated financial statement adjustments?

• A)Decrease Beginning Retained Earnings: $9,000, decrease Cost of Goods Sold: $15,000, and increase Income Tax Expense: $6,000.
• B)Increase Beginning Retained Earnings: $9,000, increase Cost of Goods Sold: $6,000, and decrease Income Tax Expense: $6,000.
• C)Decrease Beginning Retained Earnings: $15,000 and decrease Cost of Goods Sold: $15,000.
• D)Decrease Beginning Retained Earnings: $9,000 and decrease Cost of Goods Sold: $9,000.

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Definitions:

Capitalist Economy

An economic system where private individuals and business owners control the production, distribution, and exchange of goods and services, typically driven by profit motives.

Central Planning

An economic system where all major production, investment, and allocation decisions are made by the government or a central authority.

Government Ownership

The situation in which assets, enterprises, or industries are owned and operated by the government rather than private individuals or companies.

Mean of Production

Likely a typographic error intended to refer to "Means of Production," which are the resources (such as land, labor, and capital) used to produce goods and services.