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:

Perception

The process by which sensory information is organized, interpreted, and consciously experienced.

20,000 Hz

The frequency of soundwaves that typically represents the upper limit of human hearing.

Iris

The colored part of the eye that controls the size of the pupil and the amount of light that enters the eye.

Pitch

The perceived frequency of a sound, determining its "highness" or "lowness."