The Process of Aggregating Individual Sets of Financial Statements to Produce

question 7

Multiple Choice

The process of aggregating individual sets of financial statements to produce consolidated financial statements requires:

• A)that no adjustments be entered into the individual ledger accounts of entities in the group
• B)balance sheet date adjusting journal entries to be recorded in the ledger accounts of the subsidiaries
• C)accruals of expenses and revenue,directly into the retained earnings ledger account of the parent entity
• D)balance sheet date adjusting entries directly into the ledger accounts of the parent entity only.

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Definitions:

Stocks and Bonds

Financial instruments; stocks represent ownership shares in a company, while bonds are loan agreements between the bond issuer and an investor.

Comparable Units

Units or measures that are similar enough in key aspects to be used in comparisons or evaluations.

Certificates of Deposit

A savings certificate with a fixed maturity date and specified fixed interest rate that is issued by banks and is insured by the Federal Deposit Insurance Corporation (FDIC) up to a certain amount.