The Ability of an Investing Company to Affect the Operating

question 22

Multiple Choice

The ability of an investing company to affect the operating and financial policies of another company,even though the investor holds less than 50 percent of the voting stock,is known as

• A)significant influence.
• B)control.
• C)minority interest.
• D)noninfluential control.

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Definitions:

Use of Cash

Refers to how a business or individual applies their cash resources, often categorized by operating, investing, and financing activities.

Accounts Payable

Obligations a company has to pay off in the near future to its suppliers or creditors, usually within one year.

Inventory

The total amount of goods, materials, and products held by a company for the purpose of sale or production, representing both a current asset and an integral part of the supply chain.

Retained Earnings

The portion of net income that is not distributed as dividends to shareholders, but retained by the company for reinvestment.