Why Are Consolidated Financial Statements Prepared

question 149

Multiple Choice

Why are consolidated financial statements prepared?

• A)The American Institute of Certified Public Accountants requires consolidated financial statements in certain situations.
• B)The Securities and Merchant Commission requires consolidated financial statements in certain situations.
• C)The Society of Certified Fraud Examiners requires consolidated financial statements in certain situations.
• D)So financial statement users get a better picture of the total operations of the parent and subsidiary together.

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Definitions:

Weighted-Average Method

An inventory costing method that assigns an average cost to each unit of inventory, calculating it based on the weighted average of the cost of goods available for sale.

Ending Inventory

The cumulative worth of merchandise available for purchase at the conclusion of a financial period.

FIFO Method

"First-In, First-Out", an inventory valuation method where goods first added to inventory are the first ones considered sold.

Ending Inventory

The total value of goods available for sale at the end of an accounting period.