Regarding references to notes in combining financial statements, which statement is true?

In the context of combining financial statements, the practice typically involves summarizing the financial data from individual entities or components into one overall presentation. References to notes in these combined financial statements serve as a critical tool for providing additional context, explanations, and details that clarify the figures presented.

The correct understanding is that references to notes are always permitted. Including these references helps financial statement users, such as investors or analysts, understand the assumptions, accounting policies, and specific circumstances that may affect the financial data. Thus, while it is not mandated that every combined financial statement include such references, they are an essential part of comprehensive reporting practice, enabling transparency and facilitating a better understanding of the combined figures.

Therefore, the assertion that references to notes are never permitted is not accurate as it misrepresents the flexibility and utility these notes offer in enhancing the clarity and reliability of combined financial statements.