Which of the following statements is incorrect?
A) Where consolidated financial statements are prepared over a number of years, consolidation entries need to be made every time a consolidation worksheet is prepared.
B) A consolidation worksheet is used to help the process of adding together the financial statements of the parent and its subsidiaries.
C) Consolidation adjusting entries affect the ledger accounts of the parent and subsidiaries.
D) There are no consolidated ledger accounts.

Question

Quizplus · Accepted Answer

Consolidation adjusting entries are made in the consolidation worksheet to eliminate intercompany transactions and balances, not directly in the ledger accounts of the parent and subsidiaries. These adjustments ensure that the consolidated financial statements present the financial position and results of operations of the parent and its subsidiaries as if they were a single economic entity, without altering the individual ledgers of each company.

Which of the Following Statements Is Incorrect