Which One of the Following Statements Correctly Applies to a Legally

question 40

Multiple Choice

Which one of the following statements correctly applies to a legally defined merger?

• A)The acquiring firm retains its identity and absorbs only the assets of the acquired firm.
• B)The acquired firm is completely absorbed and ceases to exist as a separate legal entity.
• C)A new firm is created which includes all the assets and liabilities of the acquiring firm plus the assets only of the acquired firm.
• D)A new firm is created from the assets and liabilities of both the acquiring and acquired firms.
• E)A merger reclassifies the acquired firm into a new entity which becomes a subsidiary of the acquiring firm.

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Definitions:

Cash Sales

Transactions where payment is made immediately in cash at the time of sale.

Cash Payments Journal

A ledger book or digital record maintaining details of all cash payments made by a business.

Accounting Information System

A system of collecting, storing, and processing financial and accounting data that is used by decision-makers.

Cost Awareness

The consideration and understanding of the costs associated with conducting business and the impact on financial performance.