The Material Sale of Inventory Items by a Parent Company

question 20

Multiple Choice

The material sale of inventory items by a parent company to an affiliated company

• A)enters the consolidated revenue computation only if the transfer was the result of arm's length bargaining.
• B)affects consolidated net income under a periodic inventory system but not under a perpetual inventory system.
• C)does not result in consolidated income until the merchandise is sold to outside parties.
• D)does not require a working paper adjustment if the merchandise was transferred at cost.

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Definitions:

Probabilities

A numerical representation, between 0 and 1, of the probability that an event will take place.

Degrees Of Freedom

The number of independent values or quantities which can be assigned to a statistical distribution.

Standard Normal Distribution

The standard normal distribution is a special case of the normal distribution that has a mean of zero and a standard deviation of one.

Standard Normal Distribution

A normal distribution with a mean of 0 and a standard deviation of 1, used as a basis for comparison in statistical analysis.