As Part of the Consolidation Process,any Unrealised Profits Arising from Intragroup

question 29

Multiple Choice

As part of the consolidation process,any unrealised profits arising from intragroup merchandising transactions are eliminated.If the intragroup transactions are intra-segment transactions,the effect of this elimination on the segment data reported by subsidiaries will be to:

• A) reduce the relevant segment result reported by the subsidiary.
• B) have no effect on the segment result reported by the subsidiary.
• C) reduce both the segment result reported by the subsidiary and reduce the consolidated profit of the group.
• D) none of the above.

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Definitions:

Accounting Major

A field of study focused on the principles and techniques of preparing, maintaining, and analyzing financial records and transactions.

Algorithmic

Pertaining to or using a set of rules to be followed in calculations or other problem-solving operations, especially by a computer.

Heuristic

A shortcut (rule of thumb or informal guideline) used to reduce the amount of thinking that is needed to make decisions.

Informal Reasoning

The process of thinking about issues in a non-formal or structured manner, often used in everyday problem-solving and decision-making.