When a Parent and Its Subsidiary Use a Periodic Inventory

question 40

Multiple Choice

When a parent and its subsidiary use a periodic inventory system rather than a perpetual system,the income and asset balances reported in the consolidated financial statements are:
I.affected only if there are upstream intercompany sales of inventory.
II.affected only if there are downstream intercompany sales of inventory.

• A)I
• B)II
• C)Both I and II
• D)Neither I nor II

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Definitions:

Five-Year Period

A specific timeframe of five years used for planning, investment analysis, or as a measure of time.

Compounded Monthly

Interest calculated on the initial principal and previously earned interest, recalculated every month.

Car Loan

A financial agreement in which a borrower receives money to purchase a car and agrees to repay the lender over time, typically with interest.

Total Interest

The sum of all interest payments made over the life of a loan or investment.