The Process of Preparing Consolidated Financial Statements Requires That

question 48

Multiple Choice

The process of preparing consolidated financial statements requires that:

• A)no adjustments be made to the individual financial statements or ledger accounts of the entities in the group.
• B)adjusting journal entries be recorded in the ledger accounts of the subsidiaries only.
• C)accruals of expenses and revenues be recorded directly into the retained earnings account of the parent entity.
• D)adjusting journal entries be recorded in the ledger accounts of the parent only.

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Definitions:

Goods

Items or products that are produced to satisfy wants or needs of consumers. Goods can be tangible, like food and cars, or intangible, like services.

Services

Intangible and non-physical goods provided by individuals or companies, such as healthcare, education, and financial consulting.

Total Product

The total quantity of output produced by a firm or economy as a result of its production process.

Marginal Product

The additional output that is produced by adding one more unit of a factor, such as labor or capital.