The Process of Preparing Consolidated Financial Statements Involves the Elimination

question 50

Multiple Choice

The process of preparing Consolidated Financial Statements involves the elimination of inter-company transactions between a Parent Company and its subsidiary. Where would these entries be recorded?

• A) On the Parent's books only.
• B) On the Subsidiary's books.
• C) The entries are not recorded in the books of either company. The entries are only made on the working papers.
• D) The effect of any inter-company transaction must be reflected on the books of both companies.