Final answer:
Consolidated statements truly combine the financial details of a parent company with those of its subsidiaries. A conglomerate is a corporation that owns multiple businesses in diverse industries.
Step-by-step explanation:
Consolidated statements are indeed financial statements that combine the balance sheets, income statements, and statements of cash flow of a parent company with those of its subsidiaries or affiliates over which it has controlling interest. This is true because the consolidation process involves adding together all the assets, liabilities, income, and expenses of the parent company with those of its subsidiaries, proportionate to the degree of control the parent company has over the subsidiary.
A conglomerate is a corporation that owns many businesses and media networks, which may operate in various industries. This diversification allows a conglomerate to reduce risk, as poor performance in one sector may be offset by strong performance in another. Each individual subsidiary within a conglomerate operates independently but the financial results are reported under consolidated financial statements for the entire group of companies.
Truth in financial reporting implies that the consolidated statements accurately reflect the financial position and performance of the group as a whole. Consistent statements are crucial for maintaining transparency and trust among investors, which is why the process of consolidation must adhere to the relevant accounting standards.