An entity or business activity that is required by the applicable financial reporting framework to prepare financial information that will be included in group financial statements ________.
A)is known as a component
B)is referred to as a subsidiary
C)should send separate financial information directly to the auditor
D)should be audited by the internal audit function

Question

Quizplus · Accepted Answer

According to the applicable financial reporting framework, an entity or business activity that is required to prepare financial information that will be included in group financial statements is known as a component. A component can be a subsidiary, division, branch, or business unit of the reporting entity. The financial information of each component is aggregated to prepare consolidated financial statements for the group. Separate financial information may also be provided to the auditor, but it is not necessary to audit each component separately. The internal audit function may audit the component, but it is not mandatory.

An Entity or Business Activity That Is Required by the Applicable