Which One of the Following Is a Characteristic of a Business

question 78

Multiple Choice

Which one of the following is a characteristic of a business combination that should be accounted for as an acquisition?

• A)The combination must involve the exchange of equity securities only.
• B)The transaction establishes an acquisition fair value basis for the company being acquired.
• C)The two companies may be about the same size,and it is difficult to determine the acquired company and the acquiring company.
• D)The transaction may be considered to be the uniting of the ownership interests of the companies involved.
• E)The acquired subsidiary must be smaller in size than the acquiring parent.

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Definitions:

Revenues

Income generated from normal business operations and other business activities.

Expenses

Costs incurred in the operation of a business that reduce profitability, such as rent, salaries, and utilities.

Fees Earned

Revenue generated from services provided or work done over a specific period.

Accounting Cycle

The process of recording and processing all financial transactions of a company, from when the transaction occurs, to its representation on the financial statements.