The reasons for the preparation of consolidated financial statements include which of the following?
A) Reporting of risks and benefits of the group as a single economic entity.
B) Allowing comparison of the group with similar entities.
C) Supply of relevant information to investors in the parent entity.
D) All of the options are correct.

Question

Quizplus · Accepted Answer

All of the options listed are reasons for the preparation of consolidated financial statements. Consolidating financial information for a group of entities allows for the reporting of risks and benefits of the group as a whole, which is useful for investors and other stakeholders. It also allows for comparison with similar entities, which is helpful for understanding the group's performance relative to its peers. Finally, supplying relevant information to investors in the parent entity is one of the primary reasons for creating consolidated financial statements.

The Reasons for the Preparation of Consolidated Financial Statements Include