MGMT 411 - Chapter 3 Test Bank. Questions and Answers

MGMT 411 - Chapter 3 Test Bank. Questions and Answers Multiple Choice Questions: 1. Consolidated financial statements tend to be most useful for: A. Creditors of a consolidated subsidiary. B. Investors and long-term creditors of the parent company. C. Short-term creditors of the parent company. D. Stockholders of a consolidated subsidiary. Answer: B Learning Objective: 03-01 Topic: The Usefulness and Limitations of Consolidated Financial Statements Blooms: Understand AACSB: Reflective Thinking AICPA: FN Reporting Difficulty: 2 Medium 2. Company Pea owns 90 percent of Company Essone which in turn owns 80 percent of Company Esstwo. Company Esstwo owns 100 percent of Company Essthree. Consolidated financial statements should be prepared to report the financial status and results of operations for: A. Pea. B. Pea plus Essone. C. Pea plus Essone plus Esstwo. D. Pea plus Essone plus Esstwo plus Essthree. Answer: D Learning Objective: 03-02 Topic: Direct and Indirect Control Blooms: Understand AACSB: Analytic AICPA: FN Decision Making Difficulty: 2 M