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which of the following is a limitation of consolidated financial statements: a- Consolidated statements are benefitial...

which of the following is a limitation of consolidated financial statements:
a- Consolidated statements are benefitial only when the consolidated companies operate in different industries
b- consolidated companies provide no benefit for the stockholders and creditors of the parent company
c- Consolidated statements are benefitial only when the consolidated companies operate within similar industries

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Answer #1

Answer:

Consolidated financial statements- Consolidated financial statements are the financial statements of a company with different subsidiaries and divisions. All divisions' financial statements are combined and integrated as single financial statements

Limitation of consolidated financial statements-

Consolidated statements of diversified companies cannot be compared with industry standards.

Yes, this is true that consolidated financial statements are not comparable with the industry averages because consolidated statement has income statement and balance sheet of different subsidiaries.

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