Which of the Following Regarding the Preparation of Consolidated Financial

question 14

Multiple Choice

Which of the following regarding the preparation of Consolidated Financial Statement is correct?

• A) Once the parent company prepares Consolidated Financial Statements, it no longer needs to prepare financial statements for its own activities.
• B) Only the subsidiaries are required to prepare Financial Statements.
• C) Consolidated Financial Statements are required by the Parent Company for reporting purposes only; each company must continue to prepare its own Financial Statements.
• D) Consolidated Financial Statements are required only when both companies are publicly traded.

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Definitions:

Jointly And Severally Liable

A legal term describing a situation where two or more parties are liable together and individually for the full amount of an obligation.

Partner Commits Malpractice

A scenario where a member of a partnership engages in professional misconduct or negligence, impacting the partnership.

Partnership Losses

Financial deficits that are shared among partners in a business partnership according to their agreement or partnership rules.

Share Profits

The distribution of the financial gains generated by a corporation or a partnership to its shareholders or partners, proportional to their shareholdings or interest in the entity.