1. Why does depreciation appear as a line item in the reconciliation of operating profit with cash flow?
2. Explain why groups of companies are formed.
3. Explain the purpose of consolidated financial statements.
4. Define the terms:
(a) group;
(b) parent company; and
(c) subsidiary.
5. Explain, using the accounting equation, the effect on the parent company's balance sheet of a cash payment for an investment in a subsidiary company.
6. Explain, using the accounting equation, the effect on the parent company's balance sheet of a share issue in exchange for shares in the subsidiary company.
7. Explain what is meant by goodwill on acquisition.
8. What is an associated company?
9. Apart from the annual report, what other documents do companies use to communicate financial statement information to investors, creditors and other users of financial statements?