Consolidated Financial Statements Provide More Helpful Information Than Does the Equity

question 73

Multiple Choice

Consolidated financial statements provide more helpful information than does the equity method, because

• A)they include all the assets, liabilities, revenues, and expenses of the controlled subsidiaries, not just the investment account that represents the parent's investment in the subsidiary's common shareholders' equity and not just the parent's share of the subsidiary's net income.
• B)the parent, because of its voting interest, can control the use of all of the subsidiary's assets.
• C)the parent needs to own only a majority of the voting stock, not necessarily 100%, to control the use of 100% of the subsidiary's assets.
• D)consolidation of the individual assets, liabilities, revenues, and expenses of both the parent and the subsidiary provides a more realistic picture of the operations and financial position of the single economic entity.
• E)all of the above

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Definitions:

Voltage

The difference in electric potential between two points, expressed in volts.

Voltage Drop

The decrease in electrical potential along the path of a current flowing through an electrical circuit, indicating resistance or a possible issue.

Direct Current

Electrical current that flows in one constant direction, typical of battery power and contrasted with alternating current (AC).

Amperage

The strength of an electric current measured in amperes.