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.

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