Statement 1 (S1): A home office records shipments to its branch at billing prices and adjusts the loading account at year-end. When this approach is used, the loading account during the period will always be zero. Statement 2 (S2): If a “loading” account is used, the “shipments to branch” account on the home office books is created for the actual cost of shipments made to the branch whereas the “shipments from the home office” on the branch’s books includes any initial unrealized profit.* A. S1- True; S2- TrueB. S1- True; S2- FalseC. S1- False; S2- TrueD. S1- False; S2- False

Answered: Statement 1 (S1): A home office records…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Statement 1 (S1): A home office records shipments to its branch at billing prices and adjusts the loading account at year-end. When this approach is used, the loading account during the period will always be zero. Statement 2 (S2): If a “loading” account is used, the “shipments to branch” account on the home office books is created for the actual cost of shipments made to the branch whereas the “shipments from the home office” on the branch’s books includes any initial unrealized profit.*

A. S1- True; S2- True

B. S1- True; S2- False

C. S1- False; S2- True

D. S1- False; S2- False

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