'If There Are No Intra-Group Transactions and No Goodwill or Discount

question 8

Multiple Choice

'If there are no intra-group transactions and no goodwill or discount on acquisition, the consolidated financial statements are an aggregate of those financial statements of the companies in a group.' This statement is:

• A)true, because only intra-group transactions need to be considered in the preparation of group financial statements
• B)false, because assets and equity of the group would be overstated
• C)true, because only intra-group transactions and adjustments for differences on acquisition need to be considered in the preparation of group financial statements
• D)false, because assets and equity would be understated

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Definitions:

Reserve Requirement

The minimum amount of reserves that banks are required to hold by law, set by the central bank to control money supply.

Time Deposits

Time Deposits are bank deposits that have a fixed term and usually offer a higher interest rate compared to regular savings accounts.

Primary Reserves

Primary reserves are liquid assets held by banks to meet short-term obligations and regulatory requirements, including cash and balances with the central bank.

Monetary Policy

Actions taken by a central bank to control the money supply and interest rates in order to influence economic conditions, such as inflation and employment.