The power to participate in the financial and operating policy decisions of an entity is known as:
A) control;
B) significant influence;
C) share ownership;
D) joint control.

Question

Quizplus · Accepted Answer

Significant influence refers to the power to participate in the financial and operating policy decisions of an entity, but not control those policies. It is often associated with ownership of a significant but not majority share of voting power in another entity. Control, on the other hand, implies the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities, which goes beyond mere participation. Share ownership does not necessarily grant the power to participate in decision-making unless it conveys significant influence or control. Joint control is shared among a few entities and involves the contractually agreed sharing of control, which is distinct from the unilateral power to participate in decision-making.

The Power to Participate in the Financial and Operating Policy