The Key Characteristic That Determines When Consolidated Financial Statements Should

question 48

Multiple Choice

The key characteristic that determines when consolidated financial statements should be prepared is:

• A) the existence of transactions between the entities.
• B) control.
• C) substance over form.
• D) significant influence.

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Definitions:

Limited Liability

The legal principle where an individual's financial risk is restricted to a fixed amount, typically the value of their investment in a company, protecting personal assets from business debts and obligations.

Corporate Constitutional Rights

The legal rights and protections granted to corporations, treating them as entities that can exercise certain rights similar to individuals.

Corporate Citizenship

The commitment of a company to behave ethically and contribute to economic development while improving the quality of life of employees, communities, and society at large.

Corporation by Estoppel

A legal doctrine preventing one from denying the corporate status of an entity to escape liability after having treated it as a corporation.