Which of the Following Statements Is True with Regard to Intercompany

question 48

Multiple Choice

Which of the following statements is true with regard to intercompany transactions?

• A)The gain or loss on an intercompany transaction never is taxed.
• B)An intercompany transaction is eliminated from consolidated taxable income.
• C)All intercompany gains are recognized,but losses must be deferred.
• D)A cash sale of a business asset by the purchasing member to an acquirer outside of the group triggers immediate recognition of the gain or loss.
• E)The gain or loss on an intercompany transaction is deferred for up to ten years,after which it is recognized.

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Definitions:

Petty Cash Account

A modest sum of money maintained readily available for small, urgent costs.

Mail and Postage

The service and cost associated with sending documents and parcels through a postal system.

Missing Funds

Refers to money or assets that are unaccounted for due to error, theft, or fraud.

Petty Cash Fund

A small amount of cash on hand used for covering minor expenses, managed through an imprest system.