Introducing the Worksheet What is it? -A large sheet of accounting paper used to organize data in the preparation of financial statements -Also known as an accountant’s working papers or “rough copy”

WHY?!?! Just like how…… - Musicians compose a rough draft; -Actors rehearse a big scene; -Directors have a rough story board; -Teachers have a rough lesson plans…. Because practice makes perfect!!!

Why do accountants use the worksheet? -To discover and eliminate errors -Just like any other professional, an accountant prepares rough drafts to ensure accuracy -After all Practice makes Perfect!

Step 1 The six-column work sheet prepares you for the eight-column work sheet in Chapter 9 Step 1: Write in the heading Indicate the fiscal period

Step 2 Step 2: Enter, total, and rule the trial balance

Step 3 Step 3: Copy the balance sheet amounts to the balance sheet columns

Step 4 Step 4: Copy the income statement amounts to the income stmt. columns

Step 5 Step 5: Rule and total the last four columns Total Revenue Total Expenses Net Income (the balancing figure) Step 5: Rule and total the last four columns

Step 6 Step 6: Record the net income in the outer two of the last four columns

Step 7 Step 7: Total and rule the work sheet

Net Loss 1 Changes shown in red. Total Expenses are now higher than Total Revenue. Net Loss Situation: Assume Wages and Bank Loan were $40,000 higher

Net Loss 2 The amount of the net loss is placed in the inner two of the last four columns

Net Loss 3 Rule and total the work sheet for a loss situation