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 are recorded in the ledger accounts of the subsidiaries only.
C) accruals of expenses and revenues are recorded directly into the retained earnings account of the parent entity.
D) adjusting journal entries are recorded in the ledger accounts of the parent only.

Question

Quizplus · Accepted Answer

Consolidated financial statements are prepared by combining the financial statements of the parent and its subsidiaries without making adjustments to the individual financial statements or ledger accounts of the entities in the group. Adjustments are made in the consolidation process, not in the individual accounts.

The Process of Preparing Consolidated Financial Statements Requires That