The Financial Statements quiz #9 Flashcards
BackThe Financial Statements quiz #9
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BackWhat is the meaning of 'parent company'?
'Parent company' is a company that controls one or more subsidiaries. What is the meaning of 'subsidiary'?
'Subsidiary' is a company controlled by another company, known as the parent. What is the meaning of 'affiliated company'?
'Affiliated company' is a company related to another company by ownership or control. What is the meaning of 'joint venture'?
'Joint venture' is a business arrangement in which two or more parties share control and profits. What is the meaning of 'associate company'?
'Associate company' is a company in which another company has significant influence but not control. What is the meaning of 'equity method' in accounting?
'Equity method' is an accounting technique for investments in associates, recognizing investor's share of earnings. What is the meaning of 'cost method' in accounting?
'Cost method' is an accounting technique for investments where the investment is recorded at cost and income is recognized when received. What is the meaning of 'consolidation' in accounting?
'Consolidation' is the process of combining the financial statements of a parent and its subsidiaries. What is the meaning of 'minority interest' in consolidated financial statements?
'Minority interest' is the portion of net assets and net income of a subsidiary not owned by the parent. What is the meaning of 'push-down accounting'?
'Push-down accounting' is the practice of recording the effects of a purchase at the subsidiary level. What is the meaning of 'pooling of interests'?
'Pooling of interests' is an old method of accounting for business combinations, now replaced by the purchase method. What is the meaning of 'purchase method' in business combinations?
'Purchase method' is an accounting method where the acquirer records assets and liabilities at fair value. What is the meaning of 'business combination'?
'Business combination' is a transaction in which one company obtains control over another. What is the meaning of 'merger'?
'Merger' is the combination of two companies into one, with one company surviving. What is the meaning of 'acquisition'?
'Acquisition' is the purchase of one company by another. What is the meaning of 'spin-off'?
'Spin-off' is the creation of an independent company by distributing shares of a subsidiary to existing shareholders. What is the meaning of 'split-off'?
'Split-off' is a transaction where shareholders exchange their shares in the parent for shares in a subsidiary. What is the meaning of 'carve-out'?
'Carve-out' is the sale of a minority interest in a subsidiary to outside investors. What is the meaning of 'liquidation'?
'Liquidation' is the process of winding up a company's affairs by selling assets to pay liabilities. What is the meaning of 'bankruptcy'?
'Bankruptcy' is a legal process for companies unable to pay their debts. What is the meaning of 'reorganization' in bankruptcy?
'Reorganization' is a process in bankruptcy where a company restructures its debts and operations to continue operating. What is the meaning of 'liquidation value'?
'Liquidation value' is the estimated amount that would be received if assets were sold and liabilities paid off. What is the meaning of 'going concern value'?
'Going concern value' is the value of a company as an operating business. What is the meaning of 'book value per share'?
'Book value per share' is the equity available to common shareholders divided by the number of outstanding shares. When should the income statement be prepared in the sequence of financial statements?
The income statement is typically prepared first, as its net income is used in the statement of stockholders' equity and other statements. When should the balance sheet be prepared in the sequence of financial statements?
The balance sheet is usually prepared after the income statement and the statement of stockholders' equity, as it uses information from those statements. What is the primary purpose of an income statement?
The primary purpose of an income statement is to show a company's revenues and expenses over a period, resulting in net income or loss. What does the balance sheet list?
The balance sheet lists a company's assets, liabilities, and equity at a specific point in time. On which financial statement is finished goods inventory reported?
Finished goods inventory is reported on the balance sheet as an asset. What types of accounts are shown on the balance sheet?
The balance sheet shows asset, liability, and equity accounts. Which item would not be included on an income statement?
Asset, liability, and equity accounts are not included on the income statement; only revenues and expenses are. What does the income statement show?
The income statement shows a company's revenues, expenses, and resulting net income or loss over a period. What does the balance sheet list at a specific point in time?
The balance sheet lists the balances of assets, liabilities, and equity at a specific date. Which accounts are found on an income statement?
Revenue and expense accounts are found on an income statement. What types of accounts are shown on the income statement?
The income statement shows revenue and expense accounts. What accounts are included on an income statement?
An income statement includes accounts for revenues and expenses. What does a balance sheet list?
A balance sheet lists assets, liabilities, and equity. What is the purpose of an income statement?
The purpose of an income statement is to report a company's revenues, expenses, and net income or loss for a period. What does the income statement show?
The income statement shows the company's revenues, expenses, and net income or loss for a specific period. What does a balance sheet list?
A balance sheet lists the company's assets, liabilities, and equity at a specific point in time.
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