Identify Which of the Following Statements Is True

question 44

Multiple Choice

Identify which of the following statements is true.

• A)To qualify as a Type A reorganization,generally at least 50% of the total consideration used must be acquiring corporation stock.
• B)A Type A reorganization has the advantage of avoiding the acquisition of unknown and contingent liabilities.
• C)A merger usually involves the approval of all of the shareholders of both corporations.
• D)All of the above are false.

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Definitions:

Current Ratio

A measure used to evaluate a company’s liquidity and short-term debt-paying ability; computed by dividing current assets by current liabilities.

Vertical Analysis

A financial statement analysis method where each entry for each category is listed as a percentage of a base figure within the statement.

Horizontal Analysis

A financial analysis technique that compares line items in financial statements over different periods to identify trends.

Horizontal Analysis

Horizontal analysis is a financial analysis technique that compares historical financial data over a series of periods.