The Worksheet

Meaning of Worksheet

Work sheet is a scratch pad tool for accountants outside the accounting system. It is not a formal step in accounting cycle; rather it is the rough work done for some purpose, hence the phrase scratch pad. The accountants work out the details of the end-of-period adjustments and get a preview of the financial statements using the work sheet. 

Accounting Worksheet

Work sheet is a schedule of data showing the relationship among (1) adjusting entries (2)  adjusted trial balance, and (3) financial statements.

Unadjusted trial balance is a temporary trial balance prepared before considering year-end adjustments. 

Adjusting journal entries is process of adjusting year-end adjustment with the unadjusted trial balance.

Adjusted trial balance is a permanent trial balance that is prepared after adjusting the year-end adjustments.  

Work sheet is also known as 'extended trial balance' (ETB). This terminology is quite popular in the British accounting literature.

Importants of Work Sheet 

There are lots of importants of work sheet some of them are:

  • It helps to rectify the account balances

  • It helps to identify the adjustment needed account

  • It helps to prepare adjusted trial balance

  • It helps to see before and after effect in trial balance 

  • It helps to prepare rough financial statements

  • It helps to see the summary of financial statements in one page

  • It gives an idea about new financial status of the company

Types of Work sheet

Basically there are two types of work sheet listed as bellows:

  1. Ten Column Work sheet: It excludes the Changes in Retained Earning Column. It considers only unadjusted trial balance, adjusting entries, adjusted trial balance, income statement and balance sheet.

  2. Twelve Column Work Sheet: It includes all the column like unadjusted trial balance, adjusting entries, adjusted trial balance, income statement, changes in retained earnings and balance sheet.

Procedure of Work Sheet

The preparation of a work sheet involves five basic steps, which are as follows:

  1. Step 1: Enter the ledger balances in the Unadjusted Trial Balance

  2. Step 2: Enter the adjustments (year-end adjustments) with specific amount in the Adjustment Column

  3. Step 3: Prepare the Adjusted Trial Balance by adding and subtracting the balances of ledger accounts

  4. Step 4: Extend the adjusted trial balance amounts in to Income Statement, Retained Earnings, and Balance Sheet 

  5. Step 5: Total the Income Statement and Balance Sheet columns to determine the Net Income or Profit.

Conclusion

Work sheet is a scratch pad tool for accountants outside the accounting system. It is not a formal step in accounting cycle; rather it is the rough work done for some purpose, hence the phrase scratch pad. Work sheet is also known as 'extended trial balance' (ETB). This terminology is quite popular in the British accounting literature. There are  five basic steps involved in worksheet include unadjusted trial balance, adjustment entries, adjusted trial balance, income statement and balance sheet.

Come On, Tell Me What You Think!

Did I miss something?  Come on! Tell me what you think about this post on The Worksheet in the comments section.

Comments

Post a Comment

If you've any doubts or suggestions please let me know.

Popular posts from this blog

Accounting for Inventory

Image
Introduction Inventory is one of the most visible and tangible aspects of doing business. Raw material, Goods in process or Work-in-Process and Finished goods all represents various forms of inventory. Each type represents money tied up until the inventory leaves the company as purchased products. Likewise, merchandise stocks in a wholesale or retail store contribute to profits only when their sale puts money into the cash register. In literate sense, inventory refers to stock of anything necessary to do business. These stocks represents a large portion of the business investment and must be well managed in order to maximize profits. Meaning and Nature of Inventory Every business organization needs inventory for smooth running of its activities. It serves as link between production and distribution processes. Inventory is the quantity of goods held by a merchandising company for resale to customers. Merchandising companies determine the quantity of investment items by a physical counts...
Read more

Balance Sheet

Image
Introduction A balance sheet is a financial statement that summarizes a company's assets. liabilities and shareholders' equity at a specific period of time. In other words, It is a statement of the assets, liabilities, and capital of a business or other organization at a particular point in time. It is one of the three fundamental financial statements (Income Statement, Balance Sheet, Cash Flow Statement). Usually, It is prepared in every quarter, six months or one year depending on company's and law's requirements. Components of Balance Sheet   Assets : Assets are the items or properties owned by person or company having value to meet various financial needs. The assets can be classified into three categories. They are Real Assets: It is also known as Fixed Assets or Non-Current Assets. Those assets which can not be converted quickly into cash. These assets are also called physical assets due to inherent physical worth. Basically, its has purchased  for long-term...
Read more