CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Chapter 6 Objectives 1.Define accounting terms related to a work sheet for a service business organized as a proprietorship. 2.Identify accounting concepts and practices related to a work sheet for a service business. 1 LESSON 6-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Chapter 6 Objectives 3.Prepare a heading and a trial balance on a work sheet. 4.Plan adjustment for supplies and prepaid insurance. 5.Complete a work sheet 6.Identify selected procedures for finding and correcting errors. 2 LESSON 6-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 6-1 Creating a Worksheet

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Accounting Terms Work Sheet—columnar accounting form used to summarize the general ledger info needed to prepare financial statements Used as a “planning tool” and NOT considered a permanent accounting record Used to CREATE the Permanent Financial Reports Usually prepared in pencil 4 LESSON 6-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 6-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Work Sheets Four (4) Reasons Work Sheets are used: 1.Summarize general ledger balances. Prove debits and credits are EQUAL (Trial Balance Col 1&2) 2.Make adjustments to bring GL accounts up to date (Adjustment Col 3 & 4) 3.Separate GL accounts into Inc St & Bal Sheet (IS and BS Col 5-6/7-8) 4.Calculate the amount of Net Income or Net Loss (Done at bottom of work sheet) 6 LESSON 6-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Accounting Terms Consistent Reporting—Using the same accounting procedures the same way EACH accounting period. Fiscal Period—Length of time for which a business summarizes and reports financial information. Usually a year, quarter, month, etc. Trial Balance—Proof that ALL Debits in the GL EQUALS ALL the Credits. TRY to make them balance (TRYal Balance) 7 LESSON 6-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 6-1 PREPARING THE HEADING OF A WORK SHEET page 153 Name of Company 1 Name of Report 2 Date of Report 3 The date ALWAYS indicates the fiscal period on a work sheet! What is the time frame????

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON 6-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON Write the general ledger account titles. 2.Write the general ledger debit account balances. Write the general ledger credit account balances. 4.Add both the Trial Balance Debit and Credit columns. 3.Rule a single line across the two Trial Balance columns. 5.Write each column’s total below the single line. 6.Rule double lines across both Trial Balance columns. PREPARING A TRIAL BALANCE ON A WORK SHEET page

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 11 LESSON

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 12 LESSON 6-1 TERMS REVIEW fiscal period work sheet trial balance page 155

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Audit Your Understanding 1.What is written on the three- line heading on a work sheet? 2.What general ledger accounts are listed in the Trial Balance columns of a work sheet? 13 LESSON 6-1