Which of the Following Statements Is Not Correct

question 15

Multiple Choice

Which of the following statements is not correct?

• A) The consolidated income statement is the result of combining mechanically the parent and subsidiary income statements with the elimination of any intra-group transactions.
• B) The elimination of intra-group transactions is mathematically automatic since the sales revenue recognized in one of the income statement is part of the costs incurred in the other's income statement.
• C) The intra-group transactions affect the income of the consolidated entity.
• D) It is critical to explicitly cancel out all intra-group transactions to avoid the risk of biasing operating ratios involving sales revenue and cost of sales separately (by artificially inflating the balances).

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Definitions:

Standard Deviation

A statistic that measures the dispersion of a dataset relative to its mean.

T-Distribution

A probability distribution used in statistics for estimating population parameters when the sample size is small and the population variance is unknown.

Confidence Intervals

A range of values, derived from sample statistics, that is likely to contain the value of an unknown population parameter, expressed with a certain level of confidence.

Population Variance

A measure of the spread of a population's values, calculated as the average squared deviation from the population mean.