Consolidated Financial Statements Are Typically Prepared When One Company Has

question 17

Multiple Choice

Consolidated financial statements are typically prepared when one company has a controlling interest in another unless:

• A) The subsidiary is a finance company
• B) The fiscal year-ends of the companies are more than three months apart.
• C) Circumstance prevent the exercise of control
• D) The two company are in unrelated industries, such as real estate and manufacturing.

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Definitions:

Normal Balance

The side (debit or credit) where increases are recorded for a particular type of account, reflecting the account's normal balance position in the accounting equation.

Financial Statement

Papers that present a summary of a company's financial status, covering the balance sheet, income statement, and statement of cash flows.

Normal Balance

The side (debit or credit) of an account that is expected to have a higher balance, which is used to increase the account.

Normal Balance

The side (debit or credit) of an account that is expected to have a higher balance, based on the accounting equation.