In Respect to the Intragroup Transfer of Services, Any Profit

question 20

Multiple Choice

In respect to the intragroup transfer of services, any profit or loss is regarded as:

• A) insignificant and so not adjusted on consolidation
• B) extraordinary and so ignored for consolidation reporting purposes
• C) immediately realised
• D) unrealised.

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Definitions:

Gross Profit Amount

The difference between sales revenue and the cost of goods sold before accounting for other expenses, indicating how efficiently a company uses labor and supplies in production.

Periodic Inventory System

A method of inventory valuation where updates to the inventory account occur at periodic intervals, rather than continuously.

Inventory

The goods and materials a business holds for the purpose of resale or production, reflected as an asset on the balance sheet.

Merchandise Purchased

Goods bought by a business for the purpose of resale, forming part of its inventory.