Question

Consolidated financial statements are prepared when a parent-subsidiary relationship exists in recognition of the accounting concept of A. Materiality. B. Entity. C. Verifiability. D. Going concern

Answer 1

Answer:

The correct answer is letter "B": Entity.

Explanation:

The Accounting Entity principle or Economic Entity principle states that a commonly co-owned group of businesses can entitle to be a single entity with the purpose to generate a consolidated financial statement. A business entity could be considered to be a sole proprietorship, partnership, or corporation.