Consolidated Statements Are Proper for Neely, Inc

question 5

Multiple Choice

Consolidated statements are proper for Neely, Inc., Randle, Inc., and Walker, Inc., if

• A) Neely owns 80 percent of the outstanding common stock of Randle and 40 percent of Walker; Randle owns 30 percent of Walker.
• B) Neely owns 100 percent of the outstanding common stock of Randle and 90 percent of Walker; Neely bought the stock of Walker one month before the balance sheet date and sold it seven weeks later.
• C) Neely owns 100 percent of the outstanding common stock of Randle and Walker; Walker is in legal reorganization.
• D) Neely owns 80 percent of the outstanding common stock of Randle and 40 percent of Walker; Reeves, Inc., owns 55 percent of Walker.

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Definitions:

Administrative Expenses

Overhead or general expenses related to the administration of a business, including office salaries, utilities, and legal costs.

Planning Budget

A budget prepared for a planned level of activity; it is used for planning and control purposes within an organization.

Administrative Expenses

Expenses that are not directly related to the production of goods or services, including salaries of administrative staff, rent, and utilities.

Activity Variance

The difference between budgeted and actual activity levels, used in managerial accounting to monitor performance and control costs.