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Mastering Accounting: Worksheet Essentials

Learn the concepts and procedures for creating a fiscal worksheet, including trial balance, adjustments, financial statements, and error correction on worksheets.

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Mastering Accounting: Worksheet Essentials

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  1. Chapter 6 Work Sheet for a Service Business

  2. 16. Creating a worksheet Fiscal/accounting period – the length of time for which a business summarizes and reports financial information Work sheet – a columnar accounting form used to summarize the general ledger information needed to prepare financial statements Trial balance – a proof of the equality of debits and credits in a general ledger

  3. Accounting Concept: Consistent Reporting – accounting concept when the same accounting procedures are followed in the same way in each accounting period Accounting Period Cycle – accounting concept when changes in financial information are reported for a specific period of time

  4. 1 Name of Company 2 Name of Report 3 Date of Report PREPARING THE HEADING OF A WORK SHEET page 153 LESSON 6-1

  5. 2 1 4 3 5 6 PREPARING A TRIAL BALANCE ON A WORK SHEET page 154 1. Write the general ledger account titles. 2. Write the general ledger debit account balances. Write the general ledger credit account balances. 3. Rule a single line across the two Trial Balance columns. 4. Add both the Trial Balance Debit and Credit columns. 5. Write each column’s total below the single line. 6. Rule double lines across both Trial Balance columns. LESSON 6-1

  6. 17. Adjusting entries on a work sheet Adjustments – changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period

  7. Accounting Concept: Matching Expenses with Revenue – accounting concept when revenue from business activities and expenses associated with earning that revenue are recorded in the same accounting period

  8. 3 SUPPLIES ADJUSTMENT ON A WORK SHEET page 158 2 1 1. Write the debit amount. 2. Write the credit amount. 3. Label the two parts of this adjustment. LESSON 6-2

  9. 3 PREPAID INSURANCE ADJUSTMENT ON A WORK SHEET page 159 2 1 1. Write the debit amount. 2. Write the credit amount. 3. Label the two parts of this adjustment. LESSON 6-2

  10. 1 2 3 PROVING THE ADJUSTMENTS COLUMNS OF A WORK SHEET page 160 1. Rule a single line. 2. Add both the Adjustments Debit and Credit columns. Write each column’s total. 3. Rule double lines. LESSON 6-2

  11. 18. Financial statement information on a Work Sheet Balance Sheet – a financial statement that reports assets, liabilities, and owner’s equity on a specific date Income Statement – a financial statement showing the revenue and expenses for a fiscal period Net income – when total revenue is greater than total expenses Net loss – when total expenses is greater than total revenue

  12. 2 1 3 EXTENDING BALANCE SHEET ACCOUNT BALANCES ON A WORK SHEET page 162 1. Debit balances without adjustments 2. Debit balances with adjustments 3. Credit balances without adjustments LESSON 6-3

  13. 1 2 3 EXTENDING INCOME STATEMENT ACCOUNT BALANCES ON A WORK SHEET page 163 1. Sales balance 2. Expense balances without adjustments 3. Expense balances with adjustments LESSON 6-3

  14. Chart of accounts

  15. 4 2 1 5 3 6 7 RECORDING NET INCOME, TOTALING AND RULING A WORK SHEET page 164 1. Single rule 2. Totals 4. Extend net income 6. Totals 3. Net income 5. Single rule 7. Double rule LESSON 6-3

  16. 1 3 4 2 CALCULATING AND RECORDING A NET LOSS ON A WORK SHEET page 165 1. Single rule 2. Totals 3. Net loss 4. Extend net loss LESSON 6-3

  17. Finding and Correcting Errors on the Work Sheet Calculation Errors: • The difference is 1 ($.01, $.10, $1.00, $10) • Most likely addition • The difference can be divided evenly by 2 • Look for half the difference see if it was placed in the wrong column (ex: $48 difference look for a $24 amount in the incorrect column) • The difference can be divided evenly by 9 • Look for transposed numbers (ex: $45 written as $54) or look for a slide (ex: $12 written as $120) • The difference is an omitted amount • Look for the exact amount on the worksheet (ex: $253 as miscellaneous expense)

  18. Finding and Correcting Errors on the Work Sheet Work Sheet – complete in pencil and simply erase Ledger…

  19. 2 Correct entry 1 Incorrect entry CORRECTING AN ERROR IN POSTING TO THE WRONG ACCOUNT page 168 1. Draw a line through the entire incorrect entry. Recalculate the account balance and correct the work sheet. 2. Record the posting in the correct account. Recalculate the account balance, and correct the work sheet. LESSON 6-4

  20. CORRECTING AN INCORRECT AMOUNT page 169 2 1 3 1. Draw a line through the incorrect amount. 2. Write the correct amount just above the correction in the same space. 3. Recalculate the account balance, and correct the account balance on the work sheet. LESSON 6-4

  21. 2 1 3 CORRECTING AN AMOUNT POSTED TO THE WRONG COLUMN page 169 5 4 6 4. Draw a line through the incorrect item in the account. 5. Record the posting in the correct amount column. 6. Recalculate the account balance, and correct the work sheet. LESSON 6-4

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