Consolidated financial statements are the financial statements of a group of individual entities combined together by a process of consolidation and presented as the statements of the group as if the group were a single enterprise. The consolidation process involves adjusting and combining the individual financial statements of the entities on a line-by-line basis (that is, by adding together corresponding items of assets, liabilities, equity, revenues and expenses). The consolidated statements are the statements of an economic entity rather than those of a single legal entity, the economic entity consisting of the combined net assets of a number of legal entities. The consolidated financial statements generally consist of a consolidated balance sheet and a consolidated profit and loss account (income statement) but may include a consolidated cash flow statement. The main entity in the economic entity is referred to as the parent entity or parent undertaking, and the other entities as subsidiaries or subsidiary undertakings.

In preparing the consolidated statements, one of the key decisions is determining which entities are to be included in the economic entity. This decision is affected by the objectives of preparing the statements. The consolidation process itself, often undertaken using a worksheet or computer spreadsheet, involves adjusting for investments held by a parent entity in a subsidiary and for transactions between the members of the economic entity. The adjustments for the investment by a parent entity in a subsidiary involve an analysis of the acquisition of shares or other ownership by a parent in a subsidiary, which necessitates an analysis of the fair values of the net assets of the subsidiary at the date of acquisition, including any goodwill in the subsidiary. The relative wealth of the parent entity equity holders apart from the parent entity, called the minority interest, is also reported.

The preparation of consolidated statements throughout the world is not uniform. Legislation and accounting standards in separate countries produce different rules. The use of variations, such as equity accounting, the pooling of interests, method and proportional consolidation, differs between countries.