ITPEC IP October 2018 Question 69
Which of the following is a consolidated financial statement by which a parent company indicates the status of revenue and expenses of an accounting period of a corporate group including subsidiaries?
Explanation
Consolidated income statement — the statement showing the revenue and expenses of the whole corporate group over an accounting period.
Consolidated financial statements treat the parent company and its subsidiaries as one entity, eliminating transactions within the group. The income statement is the one that covers a period and lists revenues and expenses, arriving at the group's profit or loss for that period.
Answer (c)
Why not others:
- •(a) Consolidated statement of shareholders' equity — shows how the items of equity (net assets) changed during the period, such as dividends paid and profit retained
- •(b) Consolidated cash flow statement — shows the inflows and outflows of cash, split into operating, investing and financing activities
- •(d) Consolidated balance sheet — shows assets, liabilities and equity at one point in time, the end of the period, not revenue and expenses over it
Key rule: Income statement = performance over a period (revenue − expenses); balance sheet = position at a date; cash flow statement = movements of cash.
Corporate Activities · AI-written, may contain errors
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