The preparation of consolidated financial statements involves:

A) adjusting entries in the accounting records of the parent.
B) adjusting entries in the accounting records of the subsidiary.
C) together the financial statements of the investor and the associate.
D) adding together the financial statements of the parent and the subsidiaries.

Question

Kaitlyn Griffin · Accepted Answer

Final Answer : D, Explanation :  Consolidated financial statements involve adding together the financial statements of the parent and its subsidiaries. This is done to provide a complete and accurate picture of the financial performance and position of the entire group as a single entity. Adjusting entries may be required, but they are not the primary focus of the process. Combining the financial statements of the investor and associate (A) is not the same as consolidating financial statements, and adjusting the subsidiary's records (B) may also be necessary but is not the main step in preparing consolidated financial statements.

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