Consolidated Financial Statements Are Typically Prepared When One Company Has

question 17

Multiple Choice

Consolidated financial statements are typically prepared when one company has a controlling interest in another unless:

• A) The subsidiary is a finance company
• B) The fiscal year-ends of the companies are more than three months apart.
• C) Circumstance prevent the exercise of control
• D) The two company are in unrelated industries, such as real estate and manufacturing.

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Definitions:

Producer Surplus

The difference between the amount that producers are willing and able to sell a product for and the actual amount they do sell it for.

Consumers Surplus

The gap between the aggregate sum consumers are ready and capable of paying for a good or service versus what they actually shell out.

Elastic Demand

A market condition where the quantity demanded of a good or service significantly changes in response to a change in price.

Inelastic Demand

A situation where the demand for a product does not significantly change with a change in price.