Which of the Following Statements Is Correct

question 39

Multiple Choice

Which of the following statements is correct?

• A) The NCI is not entitled to share the group's profit.
• B) Transactions that do not affect profit will not give rise to an adjustment to the NCI.
• C) All intragroup transactions have an impact on the NCI share of equity.
• D) When the parent entity sells inventories to its subsidiary, a consolidation adjustment needs to be recorded to reduce the NCI.

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Definitions:

Cash Discount

A reduction in the invoice price offered by sellers to buyers as an incentive for early payment within a specified period.

Perpetual Inventory System

An inventory accounting system that records purchases and sales of goods instantly through computer systems, providing a continuous record of inventory levels.

Inventory Shrinkage

The loss of products between procurement and sale, often due to theft, damage, or administrative errors, affecting inventory levels.

Sales Discounts

A reduction in the price of goods or services offered to customers, typically as an incentive to encourage prompt payment.