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In: Accounting

For what purposes are the consolidated financial statements prepared?

For what purposes are the consolidated financial statements prepared?

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Solution:

Consolidated Financial Statements are defined as statements collectively aggregating a parent company and subsidiaries. These are the statements of a group or entity in which the liabilities, assets, expenses, income, equity and cash flow of various divisions and subsidiaries are presented as a single entity.

They are prepared in order to provide information about financial position, performance and changes in financial position of an entity so that they are helpul to users in making various economic decisions.

It is a single source document through which the users of accounts gets an overall picture of the holding company as well as subsidary comapnies.

Consolidated profit and loss account gives overall profitability of the group.

The stakeholders who want to know about the overall financial health of the entities can do so by using consolidated financial statements.

Hence they are prepared in order to give a complete picture of the entities workings to the group of users.

ekkarill92 answered 1 year ago
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