Chapter 18 – Worksheets and Classified Financial Statements Learning Outcome This chapter shows how to prepare a columnar worksheet and to complete fully classified final reports. Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

KEY TERMS Classification Columnar worksheet Current items in a Balance Sheet Disclosures Non-current items in a Balance Sheet Working capital Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

CLASSIFIED BALANCE SHEET AASB 101 Report showing current assets, non-current assets, current liabilities, non-current liabilities and Equity Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

CLASSIFIED INCOME STATEMENT AASB 101 Report showing details of revenue, expenses, cost of goods sold, gross profit and net profit Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

COLUMNAR WORKSHEETS Columnar worksheets contain balances of general ledger accounts and are used to facilitate preparation of classified accounts. Balance day adjustments affect either Trading or Profit and loss account and Balance Sheet. Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

COLUMNAR WORKSHEETS cont… Accrued expenses, accrued revenue, prepaid expenses and revenue in advance need to be reversed on first day of next period. Closing inventory affects both Trading account and Balance Sheet. Worksheet lists all ledger accounts and makes it easier to calculate gross and net profits. Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

CLASSIFICATION OF OPERATING EXPENSES Selling expenses Advertising for sales Sales persons’ salaries Shop rent Shop telephone Freight outwards Sales commissions paid Sales vehicles expenses Depreciation of sales vehicles, shop fittings, etc. Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

CLASSIFICATION OF OPERATING EXPENSES cont… Administrative expenses Advertising for staff Administrative staff salaries Depreciation of assets and motor vehicle Office expenses Stationery Office telephones Travel expenses Light and power Insurance Rates, rent, taxes Cleaning Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

CLASSIFICATION OF OPERATING EXPENSES cont… Financial expenses Discount allowed Interest on mortgage and loans Bank charges Interest on overdraft Bad debts Doubtful debts Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

CLASSIFICATION OF OPERATING EXPENSES cont… Miscellaneous revenues Non-operating revenues Rental income Discount revenue Commission revenue Interest revenue Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

CLASSIFICATION OF OPERATING EXPENSES cont… Extraordinary items Rare and unusual items that do not normally occur Expropriation of assets Losses from earthquakes or floods or bushfires (not in disaster prone areas) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

CLASSIFICATION OF THE BALANCE SHEET Current assets Cash at bank and cash on hand Inventories Accounts receivable less provision for doubtful debts Petty cash advance Prepaid expenses Accrued revenue Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

CLASSIFICATION OF THE BALANCE SHEET cont… Current liabilities Short-term loans Bank overdraft Accounts payable GST liability Accrued expenses Revenue in advance Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

CLASSIFICATION OF THE BALANCE SHEET cont… Non-current assets Plant and machinery Land and buildings Motor vehicles Long-term investments Patents Office furniture and fittings Computers and equipment Accumulated depreciation deducted from the relevant asset to show amount left to depreciate Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

CLASSIFICATION OF THE BALANCE SHEET cont… Non-current liabilities Loans secured by mortgage Long-term loans Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson

CLASSIFICATION OF THE BALANCE SHEET cont… Equity Capital—amount business owes owner Drawings— owner’s withdrawals from the business Net profit or loss—amount transferred from business operations for the year Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson