Author Question: The Cash account is a. closed to the owner's Capital account. b. closed to the owner's Drawing ... (Read 145 times)

eruditmonkey@yahoo.com · **on:** Jul 6, 2018

The Cash account is
a. closed to the owner's Capital account.
b. closed to the owner's Drawing account.
c. shown on the balance sheet as a liability.
d. shown on the income statement.
e. not closed.

Question 2

Why is identification of the ownership interest to be valued important?

What will be an ideal response?

cdmart10 · **Reply #1 on:** Jul 6, 2018

Answer to Question 1

e

Answer to Question 2

Identification of the ownership interest to be valued-either controlling or minority-is important because it determines the subject's ability to affect decisions. For example, a controlling interest can make a decision to sell or liquidate the business, while a minority interest cannot. Importantly, control rights are not determined solely by the percentage ownership (for example, 51 or 49). Other factors, such as the company's dispersion of ownership and provisions contained in organizational documents (such as the corporate charter or an operating agreement) must be considered. For example, in a company with widely dispersed ownership, an interest below 50 may have the ability to exercise substantial powers of control. Moreover, for some companies, percentage ownership above 50 (a supermajority) is required for certain decisions or actions.