Question

The financial statement and trial balance workpaper approaches illustrated in the chapter generate comparable information, so why learn both approaches? (Not the one from the textbook solutions please).

Answer 1

Answer :

Workpapers are tools of the accountant that facilitate the consolidation of parent and subsidiary financial statements. Given the tools available, the accountant should select those that are most convenient in the circumstances. If financial statements are to be consolidated, the financial statement approach is the appropriate tool. The trial balance approach is most convenient when the data are presented in the form of a trial balance. The accountant needs to be familiar with both approaches to perform the work as efficiently as possible.