1. 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

2. 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

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

4. 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

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

6. 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

7. 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

8. 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????

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

10. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON 6-1 1.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 154 1 2 4 3 5 6

11. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 11 LESSON 6-2 11000 10000 102500 120000 20000 5000 500000 62500 356500 21300 2800 30000 881500 1 2 496400 10000 15000

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

13. 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