Business Consolidation Quiz
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Questions and Answers

What does consolidation refer to in the context of financial accounting?

  • Legally combining two or more organizations into a single new one
  • Blending together of two or more undertakings into one undertaking
  • Aggregation of financial statements of a group company as consolidated financial statements (correct)
  • Treatment of a group of companies and other entities as one entity for tax purposes

    • What is the economic motivation for consolidation in business?

  • Access to new technologies/techniques
  • Seeking for hidden or nonperforming assets belonging to a target company (e.g. real estate)
  • Bigger companies tend to have superior bargaining power over their suppliers and clients (correct)
  • All of the above

    • What happens to the original organizations upon consolidation in business?

  • They become subsidiaries of a larger company
  • They continue to operate independently
  • They are legally combined into a single new entity (correct)
  • They merge to form a loose association

    • How is amalgamation defined under the Halsbury's Laws of England?

    <p>A blending together of two or more undertakings into one undertaking</p> Signup and view all the answers

    Consolidation in business involves the creation of multiple new entities.

    <p>False</p> Signup and view all the answers

    What does the taxation term of consolidation refer to?

    <p>Treatment of a group of companies and other entities as one entity for tax purposes</p> Signup and view all the answers

    Consolidation in the context of financial accounting refers to the aggregation of financial statements of a group company.

    <p>True</p> Signup and view all the answers

    Amalgamation under the Halsbury's Laws of England can only occur through the transfer of two or more undertakings to a new company.

    <p>False</p> Signup and view all the answers

    Bigger companies tend to have inferior bargaining power over their suppliers and clients.

    <p>False</p> Signup and view all the answers

    The economic motivation for consolidation in business includes seeking nonperforming assets belonging to a target company.

    <p>True</p> Signup and view all the answers

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