Which of the Following Statements About the Direct Approach to Consolidation

question 43

Multiple Choice

Which of the following statements about the direct approach to consolidation is true?

• A)It can be used for both simple and complex consolidations.
• B)It is a more methodical and less intuitive approach than the worksheet approach.
• C)The starting point for preparing the consolidated financial statements is the financial statements for each of the parent and subsidiary companies.
• D)The starting point for preparing the consolidated financial statements is the trial balance for each of the parent and subsidiary companies.

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Definitions:

Marginal Social Cost

The total cost to society of producing an additional unit of a good or service, including both the private costs and any external costs.

Oil Refinement

The industrial process of transforming crude oil into usable products including fuels, lubricants, and petrochemicals.

Pollution

The contamination of the natural environment, which can lead to harmful effects on ecosystems and human health.

Marginal External Cost

The additional cost imposed on society that is not accounted for by the producer as output increases.