Steps in Preparing a Worksheet

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on November 16, 2021

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).

Connect with a Financial Advisor

Worksheets help in ensuring that accounting entries have been correctly derived. Let us know which other areas in finance you need help. Please feel free to reach out to a financial advisor in Lake Oswego, OR or visit our financial advisor page to see the list of areas we serve.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True contributes to his own finance dictionary, 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, his interview on CBS, or check out his speaker profile on the CFA Institute website.

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