1. Consolidation workpaper entries normally:
a Are posted to the general ledger accounts of one or more of the affiliates
b Are posted to the general ledger accounts only when the financial statement approach is used
c Are posted to the general ledger accounts only when the trial balance approach is used
d Do not affect the general ledger accounts of any of the affiliates

2. Consolidation workpaper techniques assume that nominal accounts are:
a Open when the financial statement approach is used
b Open when the trial balance approach is used
c Open in all cases
d Closed

3. Most errors made in consolidating financial statements will appear when:
a The consolidated balance sheet does not balance
b Consolidated net income does not equal parent net income
c The retained earnings amount on the balance sheet does not equal the amount on the retained earnings statement
d Adjustment and elimination column totals do not equal

4. Net income on consolidation workpapers is:
a Adjusted when the parent uses the cost method
b Adjusted when the parent uses the equity method
c Adjusted in all cases
d Not an account balance and not subject to adjustment

5. On consolidation workpapers, individual stockholders’ equity accounts of a subsidiary are:
a Added to parent stockholders’ equity accounts
b Eliminated
c Eliminated only to the extent of noncontrolling interest
d Eliminated to the extent of the parent’s interest

6. On consolidation workpapers, investment income from a subsidiary is:
a Added to the investment account
b Added to the parent’s beginning retained earnings
c Allocated between controlling and noncontrolling stockholders
d Eliminated

7. On consolidation workpapers, the investment in subsidiary account balances are:
a Allocated between controlling and noncontrolling interests
b Always eliminated
c Carried forward to the consolidated balance sheet
d Eliminated when the financial statement approach is used

8. On consolidation workpapers, the controlling share of consolidated net income is determined by:
a Adding net income of the parent and subsidiary
b Deducting consolidated expenses and noncontrolling interest share from consolidated revenues
c Making adjustments to the parent’s income
d Subtracting noncontrolling interest share from parent net income

9. On consolidation workpapers, consolidated ending retained earnings is determined by:
a Adding beginning consolidated retained earnings and the controlling share of consolidated net income and subtracting parent dividends
b Adding end-of-the-period retained earnings of the affiliates
c Adjusting beginning parent-retained earnings for subsidiary profits and dividends
d Adjusting the parent’s retained earnings account balance

10. Under the trial balance approach to consolidation workpapers, which of the following is used?
a Unadjusted trial balances
b Adjusted trial balances
c Postclosing trial balances
d Either a or b, depending on the circumstances