The key characteristic that determines which entities financial statements should be combined into a set of consolidated financial statements is:
A)the existence of transactions between the entities
B)control
C)substance over form
D)access to the financial statements of each entity that is to be combined.

Question

Quizplus · Accepted Answer

The key characteristic that determines which entities' financial statements should be combined into a set of consolidated financial statements is control. If one entity has control over another entity, as defined by accounting standards, then the two entities' financial statements must be consolidated to reflect the results of their combined operations. The existence of transactions between the entities and access to the financial statements are important considerations, but control is the determining factor. Substance over form is also important but does not directly relate to the determination of which entities' financial statements should be combined.

The Key Characteristic That Determines Which Entities Financial Statements Should