For Various Reasons, a Single Economic Entity May Exist in the Form

question 78

Multiple Choice

For various reasons, a single economic entity may exist in the form of a parent and several legally separate subsidiaries, often referred to as an affiliated group. Which of the following is/are true?

• A)A consolidation of the financial statements of the parent and each of its subsidiaries presents the results of operations, financial position, and cash flows of an affiliated group of companies under the control of a parent as if the group of companies composed a single entity.
• B)The parent and each subsidiary are legally separate entities that operate as one centrally controlled economic entity.
• C)Consolidated financial statements generally provide more useful information to the shareholders of the parent corporation than do separate financial statements for the parent and each subsidiary.
• D)all of the above
• E)none of the above

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Definitions:

Payable

Refers to the amount of money a company owes to its creditors or suppliers, typically recorded as a current liability on its balance sheet.

Dividend Paid

The cash payment made by a corporation to its shareholders as a distribution of profits.

Stock Dividend

A stock dividend is a payment made in the form of additional shares of the company's stock rather than cash.

Shares Outstanding

Shares outstanding refer to the total number of shares of a corporation's stock that are owned by shareholders at any given time, including those held by institutional investors and restricted shares held by insiders.