Which of the following companies are subsidiaries of Gamma Co?Zeta Co: Gamma Co-新东方在线职业题库

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Which of the following companies are subsidiaries of Gamma Co?

Zeta Co: Gamma Co owns 51% of the non-voting preference shares of Zeta Co Iota Co: Gamma Co has 3 representatives on the board of directors of Iota Co. Each director can cast 10 votes each out of the total of 40 votes at board meetings.

Kappa Co: Gamma Co owns 75% of the ordinary share capital of Kappa Co, however Kappa Cois located overseas and is

subject to tax in that country.

A

Zeta Co, Iota Co and Kappa Co

B

Zeta Co and Kappa Co

C

Iota Co and Kappa Co

D

Zeta Co and Iota Co

Chapter23Introductiontoconsolidatedfinancialstatements

Iota is a subsidiary as Gamma has power to cast a majority of votes at meetings of the board of directors. Kappa is a subsidiary as Gamma owns >50% of the ordinary shares of Kappa, it doesn’t make any difference that Kappa is based overseas or pays tax in that country. Zeta is not a subsidiary of Gamma because Gamma’s investment in the non-voting preference shares will not give it the ability to control Zeta.

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Which of the following is a ratio which is used to measure how much a business owes in relation to its size?

A

Asset turnover

B

Profit margin

C

Gearing

D

Return on capital employed

A business operates on a gross profit margin of 331/3%. were $680. Gross profit on a sale was $800, and expenses

What is the net profit margin?

A

3.75%

B

5%

C

11.25%

D

22.67%

A company has the following details extracted from its statement of financial position：

$'000

Inventories 1,900

Receivables 1,000

Bank overdraft 100

Payables 1,000

The industry the company operates in has a current ratio norm of 1.8. Companies who manage liquidity well in this industry

have a current ratio lower than the norm.

Which of the following statements accurately describes the company’s liquidity position?

A

Liquidity appears to be well managed as the bank overdraft is relatively low

B

Liquidity appears to be poorly-controlled as shown by the large payables balance

C

Liquidity appears to be poorly-controlled as shown by the company’s relatively high current ratio

D

Liquidity appears to be poorly-controlled as shown by the existence of a bank

Why is analysis of financial statements carried out?

A

So that the analyst can determine a company’s accounting policies

B

So that the significance of financial statements can be better understood through comparisons

with historical performance and with other companies

C

To get back to the ‘real’ underlying figures, without the numbers being skewed by the

requirements of International Financial Reporting Standards

D

To produce a report that can replace the financial statements, so that the financial statements

no longer need to be looked at

Which of the following transactions would result in an increase in capital employed?

A

Selling inventory at a profit

B

Writing off a bad debt

C

Paying a payable in cash

D

Increasing the bank overdraft to purchase a non-current asset

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