Which of the Following Is a Limitation of Consolidated Financial

question 25

Multiple Choice

Which of the following is a limitation of consolidated financial statements?

• A) Consolidated statements provide no benefit for the stockholders and creditors of the parent company.
• B) Consolidated statements of highly diversified companies cannot be compared with industry standards.
• C) Consolidated statements are beneficial only when the consolidated companies operate within the same industry.
• D) Consolidated statements are beneficial only when the consolidated companies operate in different industries.

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Definitions:

Indexed Social Benefit

Social security or welfare benefits that are adjusted (indexed) over time to maintain their value in the face of inflation or other economic changes.

Federally-Run Program

A government program directly overseen and administered by a federal agency or department.

Tax Expenditure

describes government losses in tax revenue due to deductions, exemptions, and credits allowed to taxpayers, which can be seen as a form of government spending through the tax code.

Home Mortgage

A loan given by a bank or lender to help finance the purchase of a home, secured by the property itself.