The key characteristic that determines when consolidated financial statements should be prepared is:
A) control.
B) significant influence.
C) substance over form.
D) the existence of transactions between the entities.

Question

Quizplus · Accepted Answer

The key characteristic that determines when consolidated financial statements should be prepared is control. If a company has control over another company, then they should prepare consolidated financial statements to represent their financial position, performance, and cash flows as if they were a single entity. Significant influence and substance over form are also important factors in accounting, but they do not necessarily require the preparation of consolidated financial statements. The existence of transactions between the entities is a common occurrence in a group of companies but is not the determining factor for the preparation of consolidated financial statements.

The Key Characteristic That Determines When Consolidated Financial Statements Should