WORKSHEET
Chapter Objectives
This chapter will help the students
to:
1. define a worksheet
2. prepare a worksheet
3. prepare a financial statement
from the worksheet
Worksheet
A worksheet is an analysis paper
bridging the trial balance to the
financial statements. It contains
the year end data like adjusting
entries thus facilitating the
preparation of the financial reports
Worksheet
If a 10-column worksheet is used, the heading
and the column headings will be: Heading
contains the name of the business, name of the
report (worksheet) and the date covered (for the
period ended).
Ex. Break Up Creations
Worksheet
Worksheet
Column headings for a 10-column worksheet
• First 2 money columns, Trial Balance, debit, and credit;
• Next 2 money columns, Adjustments, debit, and
credit;
• Next 2 money columns, Adjusted Trial Balance, debit,
and credit;
• Next 2 money columns, Income Statement, debit, and
credit;
• Last 2 money columns, Balance Sheet, debit, and
credit. If an 8-column worksheet is used, the column
Steps in preparing the
Worksheet
1. Copy the trial balance as is in the worksheet under the
heading "Trial Balance;" check again the totals and double
rule.
2. Prepare the adjusting entries using the adjustment data
in the problem. Be sure to number the entries for cross-
referencing. Total the columns and double rule.
3. Extend the amount to the adjusted trial balance.
Accounts in the trial balance without adjustment will be
extended as they are.
Steps in preparing the
Worksheet
If an account has an adjustment, take note that:
a. Debit (Trial Balance column) and debit (Adjustment
column), add the two in the Adjusted Trial Balance debit
side. b. Credit (Trial Balance column) and credit
(adjustment column), add the two in the credit side of the
Adjusted Trial Balance.
c. Debit (Trial Balance) and credit (Adjustment column),
subtract and place the balance to the column of greater
value.
d. Total the columns and double rule. Be sure they are
Steps in preparing the
Worksheet
4. At this point, disregard the Trial Balance and the
Adjustment columns; concentrate only on the Adjusted Trial
Balance. Extend all assets, liabilities, drawing, and capital
accounts to the Balance Sheet and the income and
expense accounts to the Income Statement
5. Take note that the Income Statement and the Balance
Sheet columns will not be equal because the result of the
operation will appear either as income or loss. This
income / loss will be the balancing figure in the Balance
Financial statements are reports prepared by a
company’s management to present the financial
performance and position at a point in time. A
general-purpose set of financial statements
usually includes a balance sheet, income
statements, statement of owner’s equity, and
statement of cash flows.
INCOME STATEMENT
a statement showing the result of the business operation for a certain
period.
Income Statement, also known as the Profit and Loss Statement, reports
the company's financial performance in terms of net profit or loss over a
specified period. Income Statement is composed of the following two
elements:
• Income: What the business has earned over a period (e.g.
sales revenue, dividend income, etc)
• Expense: The cost incurred by the business over a period
(e.g. salaries and wages, depreciation, rental charges, etc)
Net profit or loss is arrived by deducting expenses from income.
STATEMENT OF CHANGES IN EQUITY
The statement of changes in equity summarizes the changes that occurred
in owner's equity. Changes in an enterprise's equity between two balance
sheet dates reflect the increase or decrease in its net assets during the
period.
In the case of sole proprietorships, increases in owner's equity arise from
additional investments by the owner and profit during the period. Decreases
result from withdrawals by the owner and from loss for the period. The
beginning balance and additional investments are taken from the owner's
capital account in the general ledger. The profit or loss figure comes directly
from the income statement while the withdrawals from the balance sheet
columns in the worksheet.
STATEMENT OF FINANCIAL POSITION
also known as the Balance Sheet, presents the financial position of an
entity at a given date. It is comprised of the following three elements:
• Assets: Something a business owns or controls (e.g. cash,
inventory, plant and machinery, etc)
• Liabilities: Something a business owes to someone (e.g. creditors,
bank loans, etc)
• Equity: What the business owes to its owners. This represents the
amount of capital that remains in the business after its assets are
used to pay off its outstanding liabilities. Equity therefore
represents the difference between the assets and liabilities.
I’ts Your
Turn!
