3. WHAT IS WORK SHEET
Definition: Worksheets are prepared at the end of an
accounting period and usually include a list of accounts,
account balances, adjustments to each account, and
each account’s adjusted balance all sorted in financial
statement order. As you can imagine, after a worksheet
is completely filled out, preparing financial statements
manually is quite simple. Most of the preparation work
4.
5. BENEFITS OF A WORK SHEET
A work sheet is not require report, yet
using a manual or electronic work sheet
has several potential benefits.
6. SPECIFICALLY A WORK SHEET
• Aids the preparation of financial statement.
• Reduce the possibility of errors when working with many
accounts and adjustments.
• Links accounts and adjustments to their impacts in financial
statements.
• Assists in planning and organizing an audit of financial
statement – as it can be used to reflect any adjustments
necessary.
• Help in preparing monthly and quarterly financial statements
when the journalizing and posting of adjusting entries are
7. USE OF A WORK SHEET
When a work sheet is used to prepare financial statement, it is
constructed at the end of a period before the adjusting process.
The complete work sheet includes a list of the accounts, their
balance and adjustments, and their sorting into financial
statement columns.
It provides two columns each provide the unadjusted trail
balance, the adjustments, and adjusted trail balance, the income
statement and the balance sheet (including the statement of
owner’s equity).
8. STEPS FOR PREPARING WORK SHEET
Preparing the work sheet have five important
steps:
1: Enter unadjusted trial balance:
The first step in preparing a work sheet is to list the title of every
account and its account number that is expected to appear on its
financial statements. This include all accounts in the ledger plus
any new ones from adjusting entries. Most adjusting entries_
including expenses from salaries, supplies, depreciation, and
insurance_ are predictable and recurring. The unadjusted balance
for each account is then entered in the appropriate debit or
9. 2: enter adjustments:
The second step in preparing a work sheet is to enter adjustments in
the Adjustments column.
3: prepare adjusted trail balance:
The adjusted trail balance is prepared by combining the adjustments
with the unadjusted balances for each account.
4: sort adjusted trail balance amount to financial
statements:
This step involves sorting account balances from the adjusted trail
balance to their proper financial statement columns. Expenses go to
the income statement debit column and revenues to the income
statement credit column.
5: Total statement columns, compute income or loss, and
balance columns:
Each financial statement column is totaled. The difference between the
total of the income statements columns is net income or net loss.
