Firms Sometimes Invest in the Common Stock of Other Entities

question 179

Multiple Choice

Firms sometimes invest in the common stock of other entities in order to exert significant influence or control over the other entity.U.S.GAAP and IFRS assume that firms owning between _____ of the voting stock of another entity can exert significant influence.

• A)10% and 40%
• B)15% and 45%
• C)20% and 50%
• D)25% and 55%
• E)30% and 60%

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Definitions:

Bad Debts Expense

The portion of accounts receivable that is estimated to be uncollectible during a period.

Realizable Value

The estimated amount that an asset can be sold for, less any selling costs, at the end of its useful life.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services delivered but not yet paid for.

Accounts Receivable Turnover

A financial ratio that measures how effectively a company collects on its credit sales.