1. Chapter 8 $
The Work Sheet $ $ $

2. The Sixth Step of the Accounting Cycle: The Work Sheet
The worksheet is used to:
Collect information from the general ledger accounts into one place.
Prepare the end-of-period formal financial statements
Prepared:
At the end of the accounting period
After all journal entries have been posted
In pencil – YOU CAN ERASE!!!!

3. Chapter 8 $
The Heading $ $ $

4. The Heading Who? What ? When The name of the business
Name of accounting form
When
Fiscal period covered by the work sheet
Example:
For the quarter ended March 31, 2011

5. Chapter 8 $
The Account Name and Trial Balance Sections $ $ $

6. The Account Name and Trial Balance Sections
Account numbers and account titles are listed on the work sheet in the same order as they appear in the general ledger: A, L, OE, R, E
Account balances are entered under the appropriate debit or credit column.
If an account has a zero balance – the account is included.
The zero balance is shown with a dash in the normal balance column.
Income Summary does not have a normal balance – put dashes in both columns

7. $ $ $ $ Ruling and Totaling the Trial Balance Section Chapter 8
Total debits must equal total credits. $ $ $

8. Ruling and Totaling the Trial Balance Section
Single rule drawn under a column(s)
This indicates math is to be performed.
When totaling the debit column and the credit column they must equal.
Double rule drawn under a column(s)
This indicates the amounts just above are totals and that no other entries will be made in the columns.
Totals must equal before moving onto next section. If they do not equal, you must locate and correct any errors before proceeding.

9. Chapter 8 $
The Balance Sheet Section $ $ $

10. The Balance Sheet Section
To extend the balance sheet accounts to the appropriate section is to physically transfer the amounts
Balance sheet accounts include: A, L & OE accounts without the Income Summary.
Withdrawals is extended as it has a direct impact on the Capital account.
Work from the top of the worksheet to the bottom of the worksheet when extending figures – be careful to move to the appropriate column.
This section will be used later to prepare a formal financial statement.

11. Chapter 8 $
The Income Statement Section $ $ $

12. The Income Statement Section
To extend the income statement accounts to the appropriate section is to physically transfer the amounts
Income statement accounts include: Revenue, Expense and the Income Summary account,.
The Income Summary account is used to serve as a clearing account for the temporary revenue and expense accounts.
Extended after the accounts are extended to the BS section – be careful to move to appropriate column.
This section will be used later to prepare a formal financial statement.

13. $ $ $ $ Totaling the Income Statement and Balance Sheet Sections
Chapter 8 $
Totaling the Income Statement and Balance Sheet Sections $ $ $

14. Totaling the Income Statement and Balance Sheet Sections
Draw a single rule across the four debit and credit columns.
The debit and credit columns in each section will not be equal
The difference in each section will represents the net income/loss.

15. Chapter 8 $
Showing Net Income on the Work Sheet $ $ $

16. Showing Net Income/Net Loss on the Work Sheet
Skip a line after the last account title and then write the words “Net Income” in the Account Name column
On the same line, enter the:
net income amount in the IS debit column
net loss amount in the IS credit column
net income account in the BS credit column
net loss amount in the BS debit column

17. Chapter 8 $
Completing the Work Sheet $ $ $

18. Completing the Work Sheet
Draw a single rule across all four columns on the line under the net income/loss amount
Calculate new totals for IS section.
Total debits should equal total credits
Calculate new totals for BS section.
Total debits should equal total credits.
Draw a double rule under the column totals and across all four columns.
The double rule indicates that no more amounts will be entered and the totals agree.

19. Completing the Work Sheet with a Net Loss
Chapter 8
Completing the Work Sheet with a Net Loss
Expenses are
greater than Revenue

20. $ $ $ $ The Matching Principle
Chapter 8 $
The Matching Principle
Matching expenses incurred against the revenue earned for the same period. This allows a business to see the cost of producing the revenue.
Calculate the difference between the revenue and expenses:
Revenue greater than expenses = Net income
Expenses greater than revenue = Net loss $ $ $