In preparing a worksheet, the following steps must be followed:

Post Balances in Trial Balance Columns

First of all, the names of all ledger accounts with balances are written in the first column and their balances in their respective debit and credit columns of the trial balance. The trial balance columns are then totaled.

Post Adjusting Entries in Adjustment Columns

The necessary adjusting entries are posted in the adjustment columns. The title of any account that is debited or credited in the adjusting entries but not listed in the trial balance is recorded from the next line of the trial balance total.

The adjustments columns are totaled, after which the total of the debit column should be equal to the total of the credit column.

Enter Balances in Adjusting Trial Balance Column

The resulting balance is obtained from the trial balance, and the adjustment columns are as follows:
Adjustment Columns
The resulting balance is recorded in the adjusting trial balance columns. The adjusting trial balance columns are totaled to demonstrate that no arithmetic errors have been made.

Complete Income Statement Columns

The expenses from the adjusted trial balance columns are recorded in the debit column of the income statement, and income is recorded in the credit column.

Determine Net Loss or Net Income

If the total of the credit column (income) is greater than the debit column (expense), this represents net income. The net income is recorded in the debit column to equalize the debit and credit columns of the income statement.

If the total of the debit column (expense) is greater than the credit column, it represents a net loss. The net loss is recorded in the credit column to equalize the debit and credit columns.

Complete Balance Sheet Columns

The balances of assets from the adjusting trial balance are transferred to the debit column of the balance sheet, and the balance of liabilities is transferred to the credit column. The net income is shown as a liability (credit column) and the net loss as an asset (debit column).

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Frequently Asked Questions

What are the steps in preparing a worksheet?

In preparing a worksheet, the following steps must be followed: post balances in trial balance columns, post adjusting entries in adjustment columns, enter balances in adjusting trial balance columns, complete income statement columns, determine net loss or net income, and complete balance sheet columns.

What is the purpose of a worksheet?

A worksheet is used as a tool in financial accounting to assist in the preparation of financial statements. It allows accountants to see a summary of all transactions that have occurred within an accounting period without having to reference individual ledger accounts.

How do I make sure my worksheet is accurate and up-to-date?

One of the most important steps in preparing a worksheet is ensuring that all the information included is accurate and up-to-date. You can do this by double-checking all the data before you print out your worksheet, or by incorporating automatic updates into your worksheet design.

What format should my worksheet be in?

There is no definitive answer to this question - it will depend on the specific worksheet and its intended purpose. However, it is important to make sure that the format of your worksheet is clear and easy to understand, as this will make much simpler for users to use it correctly.

What information should I include on my worksheet?

This will depend on the specific worksheet and its intended purpose. However, there are some key pieces of information that are often included on worksheets, such as headings, labels, and data grids.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.