1. © 2014 Cengage Learning. All Rights Reserved.
Learning Objectives
LO5 Prepare the Balance Sheet and Income Statement columns of a work sheet.
LO6 Total and rule the work sheet.
LO7 Apply the steps for finding errors on a work sheet.
© 2014 Cengage Learning. All Rights Reserved.

2. Extending Balance Sheet Account Balances on a Work Sheet
Lesson 6-3
Extending Balance Sheet Account Balances on a Work Sheet
LO5
A financial statement that reports the value of a business’ assets, liabilities, and owner’s equity on a specific date is called a balance sheet.

3. Extending Balance Sheet Account Balances on a Work Sheet
Lesson 6-3
Extending Balance Sheet Account Balances on a Work Sheet
LO5
Debit Balances without Adjustments 1 2
Debit Balances with Adjustments 3
Credit Balances without Adjustments

4. Extending Income Statement Account Balances on a Work Sheet
Lesson 6-3
Extending Income Statement Account Balances on a Work Sheet
LO5
A financial statement showing the revenue and expenses for a fiscal period is called an income statement.

5. Extending Income Statement Account Balances on a Work Sheet
Lesson 6-3
Extending Income Statement Account Balances on a Work Sheet
LO5
Sales Balance 1 2
Expense Balances without Adjustments
Expense Balances with Adjustments 3

6. Recording Net Income and Totaling and Ruling a Work Sheet
Lesson 6-3
Recording Net Income and Totaling and Ruling a Work Sheet
LO6
The difference between total revenue and total expenses when total revenue is greater is called net income.

7. Recording Net Income and Totaling and Ruling a Work Sheet
Lesson 6-3
Recording Net Income and Totaling and Ruling a Work Sheet
LO6
Single Rule 1 2
Totals
Single Rule 5 3
Net Income 4
Extend Net Income 6
Totals 7
Double Rule

8. Calculating and Recording a Net Loss on a Work Sheet
Lesson 6-3
Calculating and Recording a Net Loss on a Work Sheet
LO6
The difference between total revenue and total expenses when total expenses are greater is called a net loss.

9. Calculating and Recording a Net Loss on a Work Sheet
Lesson 6-3
Calculating and Recording a Net Loss on a Work Sheet
LO6
Single Rule 1 3
Net Loss 4
Extend Net Loss 2
Totals

10. CORRECTING AN ERROR IN POSTING TO THE WRONG ACCOUNT
LESSON 6-4
LESSON 6-4
12/28/2018
CORRECTING AN ERROR IN POSTING TO THE WRONG ACCOUNT
page 168 2
Correct entry 1
Incorrect entry
1. Draw a line through the entire incorrect entry. Recalculate the account balance and correct the work sheet.
2. Record the posting in the correct account. Recalculate the account balance, and correct the work sheet.

11. Finding and Correcting Errors on the Work Sheet
Lesson 6-3
Finding and Correcting Errors on the Work Sheet
LO7
Several different kinds of errors may be made when preparing a work sheet.
Three examples
There may be errors in the accounting records.
There may be errors in calculations.
An amount may be entered in the wrong column

12. The difference is 1 such as .01, .10, $1 or $10 – ADDITION
Important Items
Errors found on a worksheet may be erased because a worksheet is ___ a permanent document
If a pair of work sheet columns DO NOT balance and an error cannot be found on the work sheet, look for posting from the journal to the _______ ledger accounts
When two column totals are NOT in balance: First step is to subtract the smaller total from the larger total to find the difference
The difference is 1 such as .01, .10, $1 or $10 – ADDITION
The difference can be divided evenly by 2 with no remainder – look for that value ($48/2=$24)
The difference can be divided by 9 with no remainder – TRANSPOSED ($45/9=$5 then look for 54 vs 45 or 19 vs 91)
Also check for SLIDE – numbers moved to the right or left in an amount column ($12 recorded as $120 or $350 recorded as $35)
The difference is an omitted amount – Look for that value in an account balance that was not extended

13. Important Items Check for Errors in the Trail Balance Column
Check for Errors in the Adjustments Columns
Check for Errors in the Income Statement and Balance Sheet Columns

14. Lesson 6-3 Audit Your Understanding
1. In which Balance Sheet column is net income recorded on the work sheet?
ANSWER
Balance Sheet Credit column

15. Lesson 6-3 Audit Your Understanding
2. In which Balance Sheet column is net loss recorded on the work sheet?
ANSWER
Balance Sheet Debit column

16. Lesson 6-3 Audit Your Understanding
3. What is the first step in checking for arithmetic errors when two column totals are not in balance?
ANSWER
Subtract the smaller total from the larger total to find the difference.

17. Lesson 6-3 Audit Your Understanding
4. What is one way to check for an error caused by transposed numbers?
ANSWER
The difference between two column totals can be divided evenly by 9.

18. Lesson 6-3 Audit Your Understanding
5. What term is used to describe an error that occurs when numbers are moved to the right or left in an amount column?
ANSWER
Slide