Spreadsheets

The Role of Spreadsheets

Definition

Spreadsheet – An electronic document divided into rows and columns used for storing, organising and
manipulating data.

Spreadsheets are useful tools because they can perform calculations quickly and easily. They
can also analyse and represent (in the form of charts, graphs and tables) large volumes of
numerical data.

Features of spreadsheets

A spreadsheet worksheet is made up of rows and columns.

• Rows go across the page and are labelled with numbers

• Columns go down the page and are labelled with letters

• The intersection of a column and a row in a spreadsheet is referred to as a cell

• Every cell has its address or reference label, composed of the column and row it is
positioned in.

A spreadsheet document is called a workbook.

Here are some of the features of a blank workbook:

Feature
Number Name Description

Quick access The Quick Access Toolbar provides quick and easy access to features
1 toolbar frequently used in the spreadsheet.

The ribbon is the line of buttons and icons directly above the work area.
Clicking on one of the main menu options on the ribbon (for example, 'File',
'Home', 'Insert') will reveal the options relevant to that feature. For
instance, the options to save, open, print, etc., are presented by clicking'
2 Ribbon File'.

The file name is displayed at the top of the screen. In this example, the file
3 Filename name is ‘Features’.

The name box displays the active cell's cell reference (usually a
letter/number combination). A cell is the intersection of a row and a
Name box
column; the active cell is the currently selected cell. If a name has been
(cell defined for a cell or range of cells, that name will appear in the name box
4 reference) rather than the cell reference.
 The formula bar displays the content of the active cell. This can be used to
5 Formula bar enter content and create formulae.

A range is a group of cells. In this example, the cells shaded in yellow

6 A range represent the ranges from cells D7 to F8 (or D7:F8).

Every workbook can contain multiple worksheets. These worksheets can be

accessed using the worksheet tabs displayed at the bottom of the screen.
Worksheet
7 tabs This workbook has three worksheets, and the active worksheet is Sheet 1.

The status bar shows the current status. By default (cell mode), it displays
four options:

• Ready to indicate a general state.

• Enter to indicate content entry mode. It is displayed when you select

a cell and start typing or press F2 twice.

• Edit to indicate in-cell editing mode. It is displayed when you double-

click a cell or when you press F2 so that you can enter or edit data in
a cell.

• Point to indicate formula cell selection mode. It is displayed when

8 Status bar you start a formula and click the cells you want to include.

Cell Content

Type of
content Description Example
 • Mix of alphabets and
A text cell usually contains words or other numbers.
characters that cannot be used in mathematical
• Alpha-numeric codes.
calculations.
• Dates in text form
If the content is to be used in formulae, it must be
Text converted into values. • Other forms of text.

• Numbers

• Dates in value form

A value is a number that can be used in a
Values calculation • Other useable values

• Mathematical operators

• Links to cell references

Instructions for performing calculations. Indicated • Spreadsheet formulae (SUM,

Formulae by an equal (=) sign at the start of the formula. PRODUCT, COUNT, etc.)

Mathematical Operators

Step Description Example

Cells A1 and A2 contain values.

1 The objective is to calculate the sum of cells A1 and A2 in cell B1.

2 Input equal sign in cell B1

3 Select cell A1

4 Input the addition operator

5 Select cell A2

6 Press Tab or Enter to calculate the sum.

• For subtraction, use a subtraction operator (−)

• For multiplication, use a multiplication operator (×)

• For division, use a division operator (/)

Key Point

The mathematical order of operations applies when using mathematical operators in a spreadsheet.

For example, the spreadsheet will perform multiplication and division operations before addition and
subtraction, and operations in parentheses will be completed first.
 Example

To calculate the average monthly gross profit based on Quarter 1. use the gross profit value for Quarter
1 ($4,250) and divide it by 3 (the number of months).

To calculate the predicted annual gross profit based on the current rate, the average monthly gross
profit is to be multiplied by 12 months.

SUM Function
The sum function can rapidly calculate the sum of multiple cells.

Step Description Example

Cell range A1 to A5 contains values.

The objective is to calculate the sum of cell range A1

1 to A5 in cell B1 using the SUM function.

Input an equal sign in cell B1, and the SUM function,

2 with an opening parenthesis.

Select cell range A1 to A5 by clicking and dragging to

select the cell range.

Alternatively, the cell range could be typed in as

3 A1:A5.
 4 Type in closing parenthesis to close off the function.

5 Press Tab or Enter to calculate the sum.

Activity 1

Write the correct formula (using cell references) and destination cell to calculate the
requirement.

Destination
Requirement Formula cell

Use the addition (+) operator to calculate the sum of cells B3, C3, and D3,
in cell E3.

Use the SUM function to calculate the sum of cell range A4 to A7 in cell
B4

Use the multiplication (×) operator to multiply cell E3 by 4 in cell A1.

 Use the division (/) operator to calculate the quotient of cell A2
(dividend) and cell A3 (divisor) in cell B4

Calculate the product of the sum of cells A1 and A2, with A3, in A4

Calculate the quotient of cell E3, with the divisor being the difference
between cell F1 (minuend) and F2 (subtrahend), in cell A8

*Please use the notes feature in the toolbar to help formulate your answer.

Destination
Requirement Formula cell

Use the addition (+) operator to calculate the sum of cells B3,
C3, and D3, in cell E3. =B3+C3+D3 E3

Use the SUM function to calculate the sum of cell range A4 to

A7 in cell B4 =SUM(A4:A7) B4

Use the multiplication (×) operator to multiply cell E3 by 4 in cell

A1 =E3×4 A1

Use the division (/) operator to calculate the quotient of cell A2

(dividend) and cell A3 (divisor) in cell B4 =A2/A3 B4

Calculate the product of the sum of cells A1 and A2, with A3, in
A4 =(A1+A2)×A3 A4

Calculate the quotient of cell E3 (dividend), with the divisor

being the difference of cell F1 (minuend) and F2 (subtrahend), in
cell A8 =E3/(F1−F2) A8

AVERAGE Function

The AVERAGE function calculates the average of the selected range of values.
Step Description Example

Cell range A1 to A5 contains values.

The objective is to calculate the average of cell

range A1 to A5 in cell B1 using the AVERAGE
1 function.

Input an equal sign in cell B1, and the AVERAGE

2 function, with an opening parenthesis.

Select cell range A1 to A5 by clicking and dragging

to select the cell range.

Alternatively, the cell range could be typed in as

3 A1:A5.

Type in closing parenthesis to close off the

4 function.
 5 Press Tab or Enter to calculate the average.

ROUND Function

The round function changes the value of a cell by rounding the number to a specified
number of digits.

The ROUND function changes the underlying value rather than just changing how a value is
displayed (which is the case when formatting numbers).

Step Description Example

The objective is to round the value of cell A1 using the

1 ROUND function, to zero decimal places, in cell B1

Input an equal sign in cell B1, and the ROUND function,

2 with an opening parenthesis.
3 Select A1 and add a comma after the cell reference.

Type 0 to round to zero decimal places, then close

4 parenthesis to close off the function.

5 Press Tab or Enter to round the figure.

 The digit placed after the comma in the ROUND
function determines the place the number is round to:

Formula cell Formula Result

B2 =ROUND(A2,2) 1234.56

B3 =ROUND(A3,1) 1234.6

B4 =ROUND(A4,−1) 1230

B5 =ROUND(A5,−2) 1200
PS

IF Function

The IF function applies a logical test and returns different values depending on whether the
logical test has been met.

Step Description Example

The objective is to evaluate if the value in cell A1 is less than 10 and return the
1 value 1 if the logical test is met and 0 if the logical test fails in cell B1.

2 Input an equal sign in cell B1 and the IF function with an opening parenthesis.
 Input the logical test with the cell reference A1, then add a comma.

3 =IF(A1<10,

Type 1 after the first comma (returns a value of 1 if the logical test succeeds),
then add a comma.

4 =IF(A1<10,1,

Type 0 after the second comma to return a value of 0 if the logical test fails, and
then a closing parenthesis to close the formula.

5 =IF(A1<10,1,0)

Press Tab or Enter to run the IF function.

6 The value of 1 is returned, as 9 is less than 10.

 Copying the formula to the other cells in the column yields the
following results:

Formula cell Formula Result

B2 =IF(A2<10,1,0) 0

B3 =IF(A3<10,1,0) 1

B4 =IF(A4<10,1,0) 0

B5 =IF(A5<10,1,0) 1
PS

Activity 2

The following spreadsheet includes the monthly sales figures for an organisation. If a
salesperson achieves monthly sales above $10,000, they are paid a bonus of $1,000.

Using the IF function, determine the formula to determine whether each salesperson
would receive a bonus based on the condition given above and the predicted returned
value.

If the person meets the conditions to receive the bonus, the value of 1000 should be
returned to the formula cell.

If the person does not meet the conditions to receive the bonus, the value of 0 should be
returned to the formula cell.
 Salesperson Formula cell Formula Returned value

Heng C2

Chew C3

Bennet C4

Tanya C5

*Please use the notes feature in the toolbar to help formulate your answer.

Salesperson Formula cell Formula Returned Value

Heng C2 =IF(B2>10000,1000,0) 0

Chew C3 =IF(B3>10000,1000,0) 1000

Bennet C4 =IF(B4>10000,1000,0) 1000

Tanya C5 =IF(B5>10000,1000,0) 0

Uses of spreadsheets in cost and management accounting

Spreadsheets are used to perform a wide range of functions. Their flexibility means they can
be designed and adapted to fit various tasks.

• Preparation of budgets

• Inventory valuation

• Preparation of monthly management accounts

• Calculation of variances

• Forecasting costs and revenues

• ‘What if’ analysis

• Ad-hoc analysis of revenue and cost items

 • Creation of charts to display management accounting information visually

Advantages and limitations of spreadsheets

1.10.1. Advantages of spreadsheets

• Spreadsheets are relatively easy to use.

• The use of formulae should reduce calculation error compared with a manual
system.

• Calculations can be performed more quickly, and data can be processed faster in a
spreadsheet compared with a manual system.

• Once a spreadsheet has been set-up, including all the necessary formulae, it can
easily be copied, e.g. for use again in the next period.

• Data may be linked from one cell to another, speeding up processing and the
production of reports.

• Data may be imported from other systems and spreadsheets may be directly linked
to them.

• Spreadsheet output can be formatted and presented professionally, including charts.

1.10.2. Limitations of spreadsheets

• Spreadsheets cannot detect data input errors.

• Errors in formulae may not be obvious and can be difficult to find.

• Spreadsheets are at risk of cyber-attack and system failure.

• Spreadsheets lack the formal structure and controls of other systems e.g. they are
easily amended without a visible audit trail.

• Database software is more stable and secure than spreadsheets and is therefore
more suitable for data management, queries, protection, and storage of large
amounts of data.