Answered: Failure to eliminate intercompay sales…

Failure to eliminate intercompay sales would result in an overstatement of consolidated: a. Gross profit b. Net income c. All of the above d. Cost of sales

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 1DQ: Explain the meaning of (A) differential revenue, (B) differential cost, and (C) differential profit...

See similar textbooks

Related questions

Q: Why Sales revenue does not include the residual value?

A: The residual value, also known as salvage value, is the estimated value of a fixed asset at the end…

Q: hich of the following is not one of the criteria for revenue recognition? (Assume the company…

A: As Per ASPE Revenue Recognition, Revenue is the gross inflow of cash receivable or other…

Q: Companies that use OSD can deduct the cost of sales or the cost of services. Is it true or false

A: Business activities in every country are governed by certain Business laws that have direct…

Q: Disregarding the special circumstances when bases other than the point of sale are used, discuss the…

A: Revenue recognition is a generally accepted accounting principle (GAAP) that states the conditions…

Q: Under net realizable value method of apportioning joint costs to joint products, the selling &…

A: The question is multiple choice question and is related to Joint product in Process costing.…

Q: One of the accepted methods of accounting for by-product is to recognize the value of the by-product…

A: By product is the product that is manufactured with the primary product but later on, it is…

Q: In the sell-or-process-further decision,a. joint costs are always relevant.b. total costs of joint…

A: Management accounting: The act of distinguishing, investigating, , measuring, interpreting, and…

Q: Which of the following accounting treatments for costs related to business combination is incorrect?…

A: Costs associated to the establishment of the newly created corporation, also known as…

Q: A consolidated income statement must clearly separate income attributable to the controlling and…

A: Consolidation is the process of combining financial statements of two companies, in which one is…

Q: Which of the following intercompany inventory transfers impacts the calculation of noncontrolling…

A: While calculating the Non Controlling Interest ( NCI ) in consolidated statement , the NCI is…

Q: Which of the following statements is correct? Statement 1: Any unrealized profit or loss…

Q: Choose the correct. What is the primary reason we defer financial statement recognition of gross…

A: a) When goods are transferred within the consolidated entity and such goods are unsold as on balance…

Q: A graphic depiction of the break-even point is known as a cost-volume-profit (CVP) chart whereby the…

A: The representation of break even point in graphical form is said to be cost volume profit analysis.

Q: An advantage of the residual income measure over the return on investment measure is: residual…

A: Residual income approach involves net income after deductions of cost of capital from operating…

Q: Please answer the following questions relating to unrealized profit in a business combination. 1)…

A: Unrealized gains are prospective profits that exist on paper as a consequence of an investment. This…

Q: The break-even point is the sales level at which a company neither earns a profit nor incurs a loss…

A: The break even sales units are calculated as fixed cost divided by contribution margin per unit.

Q: The consolidation procedures for intercompany sales are similar for upstream and downstreams sales…

A: Hi student Since there are multiple questions, we will answer only first question. If you want…

Q: When a buying division purchases from outside supplier because the minimum transfer price is higher…

A: The maximum price is the price that can be paid by the buying decision so it may have no loss.

Q: Product profitability is best judged through A. P/v ratio B. Gross profit ràtio C. Operating…

A: The product profitability is referred as the amount of profit which is obtained from product or…

Q: In situations where there are routine inventory sales between parent companies and subsidiaries,…

A: Consolidation of parent company and subsidiary company.

Q: Which of the following accounting treatments for costs related to business combination is incorrect?

A: Answer - The Pre incorporation Costs shall not be capitalised. If shall be debited to Profit and…

Q: Do you agree with the accounting treatment that Overstock typically applied to the revenues…

A: Revenues include amount of service revenue provided and merchandise goods sold in the market. It is…

Q: Which of the following is the disadvantage of using FIFO method. a. The assumed flow of costs…

A: Lets understand the FIFO method and their advantages and disadvantages. As the name suggest, First…

Q: What is the primary reason we defer financial statement recognition of gross profits on intra-entity…

A: Intra entity transfer: It refers to the transactions between the subsidiarity company and the parent…

Q: Distinguish between the sales value at splitoff method and the NRV method

A: Sales value at split-off method: Sales value at split-off method allocates joint cost to each joint…

Q: Which of the following accounting treatments for costs related to business combination is incorrect?…

A: The cost related to business corporation, also known as pre incorporation expenditure, are treated…

Q: Gross profit from sales is the difference between

A: Gross profit means the excess of revenue against the cost of good sold from the operating activity…

Q: What is the preferred order of reconciliation? cost, sales, income O income, cost, sales sales,…

A: Income is defines as total costs of the project deducted from total sales from the project.

Q: When a subsidiary sells inventory to a parent, the intra-entity profit is removed from the…

A: Consolidated financial statements: When an investor company holds above 50% in the outstanding stock…

Q: A key factor is one which restricts O The volume of sales The volume of production The volume of…

A: Key factors means those significant factors which can impact a business organisation to a great…

Q: Which of the following statements related to the application of the lower of cost and net realizable…

A: Option B is correct

Q: Profits -to-Sales relationships are defined as profit margins. Select one: a. True b. False

A: Ratio analysis is referred as the quantitative method of understanding company’s liquidity,…

Q: The method of comparators can be applied using the ratio of operating income to revenue as a basis…

A: Operating Income is an accounting number that measures the amount of operating profit for a company…

Q: Statement 1: Any loss acquired when the costs related to processing, storing, and disposing of…

A: Let us first understand what are by products. By products are something that is incidental to the…

Q: Explain the term sales value at splitoff method.

A: Definition: Product costs: The costs incurred to acquire the merchandise, ship the stock, prepare…

Q: Which of these expressions is correct? (A Profit plus operating expenses = sales B all of these are…

A: The gross profit is calculated as difference between sales and cost of goods sold. The net income…

Q: Which of the following statements is true regarding the lower of cost or net-realizable value (NRV)?…

A: Inventory means the stock of goods in which the businessmen deals. Every company wants to maintain…

Q: Gross profit is the gross sales price charged for the goods sold A.True B.False

A: Gross profit means the profit earned by selling the goods without considering the indirect expenses…

Q: n agreement for the division of profits but none for losses,

A: Profit sharing ratio is a term used in partnership accounting. This is the ratio in which profits…

Q: Gross profit is: The amount left over after cost of goods sold is subtracted from net sales. A.Net…

A: Introduction:- Income statement shows company's income and expenses over a period of time.…

Q: the economic order quantity model the return on capital that is forgotten when it is invested in…

A: In EOQ model that is economic order quantity we consider the lot for which there will be overall…

Q: It is said that the most important/critical component of the sales comparison approach to value is O…

A: Sales refer to the transaction arises and taken place between two or more individual or companies in…

Q: Explain why consolidated entities defer intra-entity gross profit in ending inventory and the…

A: Despite the entry TI, the inflated ending inventory figure causes cost of goods sold to be too low…

Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Failure to eliminate intercompay sales would result in an overstatement of consolidated:

a. Gross profit

b. Net income

c. All of the above

d. Cost of sales

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1)

VIEW

Step 2)

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Explain the meaning of (A) differential revenue, (B) differential cost, and (C) differential profit (loss).
Gross profit will result if: O Sales revenues are greater than operating expenses. Operating expenses are greater than cost of goods sold. Sales revenues are greater than cost of goods sold. O Operating expenses are less than net income.
Gross income derived from business shall be equivalent to gross sales less salesreturns, discount and allowances, but undiminished of cost of goods sold. a.true b.false
A positive price-to-book ratio indicates something is wrong with a company's use of its assets. True False
Selling expenses are subtracted from the sales price in computing amount realized. True or false
The ratio of Gross profit expressed as a percentage of sales is called: a. Gross Profit Ratio O b. Net Profit Ratio c. None of these O d. Operating Profit Ratio
Which of the following is not a component of Net Sales?a. Sales Returns and Allowancesb. Sales Discountsc. Cost of Goods Soldd. Sales Revenue
Gross profit is: The amount left over after cost of goods sold is subtracted from net sales. A.Net sales less operating expenses. B.Sales less sales discount. C.less sales discounts. D.Net sales less selling expenses
Is there no profit sharing ratio for the net income distribution board?
Product profitability is best judged through A. P/v ratio B. Gross profit ràtio C. Operating leverage D. None of these
Which of the following is not a disadvantage of the LIFO inventory cost flow assumption? a. The impact of LIFO liquidation profits b. It does not match the most recent costs with revenue c. The possibility of income manipulation by management d. It impairs comparability between companies using LIFO
When applying lower of cost or net realizable value under the FIFO, average cost, or specific identification method, market value a.is defined as the selling price. b.should not exceed the net realizable value plus an allowance for a normal profit margin. c.should not exceed the net realizable value less an allowance for a normal profit margin. d.is defined as the net realizable value.