Consolidated financial statements:

Question

Quizplus · Accepted Answer

Consolidated financial statements are prepared by a parent company to show the results of operations, cash flows, and the financial position of all entities under its control, including all subsidiaries. The purpose is to give a complete and accurate picture of the overall financial performance of the group. Therefore, choice A is the best answer. B is incorrect because investments in subsidiaries are shown as a separate line item on the parent's balance sheet, while the subsidiary's assets and liabilities are included in the consolidated balance sheet. C is incorrect because consolidated financial statements include the results of operations, cash flows, and financial position of all legal entities under the parent's control, not just the parent. D is incorrect because consolidated financial statements do include a balance sheet. E is incorrect because consolidated financial statements cover all legal entities under a parent's control, not just subsidiaries.

Consolidated Financial Statements