According to the Companies Act 2013, when is a company considered to be a subsidiary of another company?

If the other company controls its board of directors.

If it holds more than half of its equity share capital.

If it is a subsidiary of a company that is a subsidiary of the other company.

What financial documents of a subsidiary company should be attached to the balance sheet of a holding company?

Only a copy of the subsidiary's Balance Sheet.

A copy of its Balance Sheet, Statement of Profit and Loss, and Report of Board of Directors.

Only a copy of the subsidiary's Report of Auditors.

A copy of its Statement of Profit and Loss and Report of Board of Directors.

What is the primary purpose of a holding company acquiring shares in subsidiary companies?

To merge the subsidiary companies into a single entity.

To control the subsidiary companies and have a significant influence.

To dissolve the subsidiary companies and absorb their assets.

To diversify the subsidiary companies' business operations.

Which of the following advantages is NOT associated with a company operating as a group of companies?

Decentralization of financial risk.

Diversification of business activities at a lower cost.

Dissolution of subsidiary companies.

Fulfillment of legal obligations.

When preparing a consolidated financial statement, what is included in the consolidated balance sheet?

Only the assets and liabilities of the holding company.

Only the assets and liabilities of the subsidiary companies.

The assets and liabilities of the holding company and its subsidiaries.

The assets and liabilities of the holding company, but not its subsidiaries.

What is the purpose of calculating "Minority Interest" in a consolidated balance sheet?

To identify the subsidiaries with the smallest assets.

To calculate the proportion of shares held by outsiders in the holding company.

To determine the proportion of shares held by the holding company in subsidiaries.

To calculate the proportion of subsidiary companies' profits.

When there are inter-company balances (mutual owings) between the holding company and its subsidiary, these should be eliminated from the consolidated balance sheet to:

Increase the value of minority interest.

Reduce the value of minority interest.

Show the total value of inter-company transactions.

Simplify the presentation of consolidated financials.

What is the primary impact of issuing bonus shares by a subsidiary company on the consolidated balance sheet?

Increase in the value of goodwill.

Decrease in the value of minority interest.

Reduction in the value of capital reserves.

No significant impact on the consolidated balance sheet.

If dividend is declared by a subsidiary company out of its revenue profits, how does it affect the consolidated balance sheet of the holding company?

Decrease the value of investments in subsidiary.

Increase the value of P&L Account.

Increase the value of cash or bank balances.

Decrease the value of minority interest.

Holding Companies - 2 Free MCQ Practice Test with Solutions

	Advanced Corporate Accounting 89 videos\|52 docs\|22 tests

	Advanced Corporate Accounting 89 videos\|52 docs\|22 tests

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