XYZ Corp. has operations In the U.S. and Canada. Within Canada, it has two separate Divisions due to Statutory requirements: one in Quebec and another in Ontario. How would you define the…

Question

Options

• Atwo Ledgers, two Legal Entitles, and two Operating Units
• Btwo Ledgers, two Legal Entitles, and three Operating Units
• Ctwo Ledgers, three Legal Entities, and two Operating Units
• Dtwo Ledgers, three Legal Entitles, and three Operating Units
• Ethree Ledgers, three Legal Entities, and three Operating Units

• A
  2% (1)
• B
  5% (2)
• C
  2% (1)
• D
  82% (36)
• E
  9% (4)

Explanation

Option D is correct because XYZ Corp. spans two countries (U.S. and Canada), requiring 2 Ledgers - one per country due to different currencies and accounting standards. The key phrase "statutory requirements" signals that Quebec and Ontario must be separate Legal Entities (legally registered companies), giving 3 total (U.S. + Quebec + Ontario). Each legal entity then maps to its own Operating Unit, yielding 3 Operating Units as well.

Why the distractors fail:

• A & B undercount Legal Entities (2) by treating Canada as a single legal entity - but "statutory requirements" explicitly demands separation, not just operational convenience.
• B gets Operating Units right (3) but still misses the legal entity count.
• C correctly identifies 3 Legal Entities but then undercounts Operating Units (2) - each distinct legal entity requires its own Operating Unit, so they must match.
• E overcounts Ledgers (3) - Quebec and Ontario share the same Canadian ledger (same currency/GAAP), so Canada only needs one ledger despite having two legal entities.

Memory tip: Map the trigger words - "country" → Ledger, "statutory/legal requirement" → Legal Entity, and Operating Units always equal the number of Legal Entities unless told otherwise. So: 2 countries = 2 Ledgers; 3 legally distinct entities = 3 Legal Entities = 3 Operating Units.

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