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Some Aspects Regarding The Theories Of Consolidated Financial Statements

Author

Listed:
  • Carmen NISTOR

    (Doctoral School of Economic and Business Administration, Alexandru Ioan Cuza University Iasi)

Abstract

Although accounts consolidation was used in practice from the early 1900’s its theoretical basis were developed later in concordance with the rise of concepts like “entity” and “group”. The aim of this article is to examine the literature in the accounting field regarding the consolidation theories developed over the years. In order to discuss the different opinions regarding the consolidation theories we used the descriptive approach. As a result we tried to explain how these theories appeared and developed, respectively what consequences have their use in preparing consolidated financial statements. The results of the study suggest that every theory has certain aspects which differentiate it from the others in terms of recognition of subsidiary income and reporting net assets of the subsidiary. However, from all theories analyzed, the entity theory takes into account several guidelines of maximum importance when preparing consolidated financial statements: “You can’t own yourself!”, “You can’t owe yourself money!”, “You can’t make money selling to yourself.”

Suggested Citation

  • Carmen NISTOR, 2015. "Some Aspects Regarding The Theories Of Consolidated Financial Statements," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 7, pages 431-436, April.
    • Handle: RePEc:cmj:seapas:y:2015:i:7:p:431-436
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    More about this item

    Keywords

    Proprietary theory; Entity theory; Enterprise theory; Parent company theory; Parent company extension theory; Residual equity theory;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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