1. THE WORKSHEET AND THE FINANCIAL STATEMENTS
Chapter 9
Objectives:
1. Record a trial balance on a worksheet.
2. Complete the worksheet.
3. Prepare the income statement, statement of owner’s equity, and balance sheet from the worksheet.

2. Preparing the Worksheet
Chapter 9
Preparing the Worksheet
The worksheet is usually prepared in pencil since it is a plan for the final reports.

3. Preparing the Worksheet (continued)
Chapter 9
Preparing the Worksheet (continued)
Debits for Balance Sheet items are listed in the Debit column of the Balance Sheet section.
Credits for Balance Sheet items are listed in the Credit column of the Balance Sheet section.

4. Preparing the Worksheet (continued)
Chapter 9
Preparing the Worksheet (continued)
Credits for Income Statement items are listed in the Credit column of the Income Statement section.
Debits for Income Statement items are listed in the Debit column of the Income Statement section.

5. Determining the Result of Operations
Chapter 9
Determining the Result of Operations
The total of the Debit column in the Income Statement section shows the total expenses for the period.
The total of the Credit column in the Income Statement section shows the total revenue for the period.

6. Determining the Result of Operations (continued)
Chapter 9
Determining the Result of Operations (continued)
The difference between the Debit and Credit columns in the Income Statement section is the net income (or net loss) from operations. (When revenue is greater than expenses, the result is net income. When expenses are greater than revenue, the result is a net loss.

7. Preparing the Financial Statements
Chapter 9
Preparing the Financial Statements
Information from the worksheet can be used to prepare the balance sheet, the income statement and the statement of owner’s equity.

8. Accounting Terminology
Chapter 9
Accounting Terminology
Account-form balance sheet
Report-form balance sheet
Worksheet

9. Chapter 9
Chapter Summary
A special form known as a worksheet is often used to compute the net income or net loss and to plan the financial statements before they are prepared.

10. Chapter Summary (continued)
The trial balance is completed in the first two money columns of the worksheet.
The net income or net loss is the difference between the totals of the Debit and Credit columns in the Income Statement section of the worksheet.

11. Chapter Summary (continued)
The net income is recorded in two columns of the worksheet -- the Debit column of the Income Statement section and the Credit column of the Balance sheet section.
A net loss would be recorded in the Credit column of the Income Statement section and the Debit column of the Balance Sheet section.

12. Chapter Summary (continued)
The Income Statement is prepared from the figures in the Income Statement columns of the worksheet.
The Statement of Owner’s Equity is prepared from figures in the owner’s capital account in the general ledger and from figures in the Balance Sheet columns of the worksheet.

13. Chapter Summary (continued)
The Balance Sheet is prepared from figures in the Balance Sheet columns of the worksheet and from the ending capital figure shown on the Statement of Owner’s Equity.

14. Chapter Summary (continued)
The report-form balance sheet, the liabilities and owner’s equity are placed under the assets.
The account-form balance sheet shows the assets on the left side and the liabilities and owner’s equity on the right side.

15. Chapter 9
Topic Quiz
Answer the following true/false questions:
1. There is no relationship between the worksheet and the financial statements.
FALSE
2. The Income Statement is prepared from the figures in the Income Statement columns of the worksheet.
TRUE
3. Net income or loss is determined by the difference between the totals of the Debit and Credit columns in the Balance Sheet section of the worksheet.
FALSE

16. Investigating on the Internet
Chapter 9
Investigating on the Internet
Sources of information about worksheets and financial statements may be available on the websites of smaller businesses.
As a research assignment, search for a website that contains information related to the use of worksheets and financial statements in business.

17. End of Presentation

18. 1. There is no relationship between the worksheet and the financial statements.
FALSE
The financial statements are prepared from the data recorded in the worksheet.
(Return to Topic Quiz)

19. 3. Net income or loss is determined by the difference between the totals of the Debit and Credit columns in the Balance Sheet section of the worksheet.
FALSE
. . .between the totals of the Debit and Credit columns in the Income Statement section of the worksheet.
(Return to Topic Quiz)