Worksheet and Accounting
A worksheet is a multiple-column form that is used in preparing and adjusting financial statements. 3 types of the worksheet are; (1) General worksheet, (2) Detailed worksheet, (3) Audit worksheet. For preparing an accounting worksheet you must follow Simple Steps to verify accounting information accuracy before preparation of financial statements. Prepare financial statements from a worksheet is relatively easy because all necessary accounting information is properly presented and structured in the worksheet.
What is Worksheet?
Multiple column sheets wherein all necessary information used for the preparation of the financial statement is recorded in a systematic process is called a worksheet. The worksheet is not a permanent account. It is not a part of a journal or ledger. It is a device used for easy preparation of adjusting entries and financial statements.
The worksheet is a multi-column sheet or a computer spreadsheet where the accountant writes, in brief, information necessary for the preparation of adjusting entries and financial statements.
In bigger organizations where the volume of accounts and adjustments are much more, the possibility of error remains at the time of adjustment of adjusting entries with ledger accounts if the worksheet is not prepared.
The preparation of financial statements correctly becomes complicated and sometimes is delayed. In the present day world, it has become the practice of preparing worksheets in big organizations before the preparation of financial statements. Accountants make adjustments of adjusting entries with other relevant ledger accounts before the preparation of financial statements. Before the preparation of financial statements, the accountants want to be sure of the arithmetical accuracy of accounts by making adjustments of adjusting entries with ledger accounts through the worksheet and then go for the preparation of financial statements.
The worksheet is prepared at the end of the accounting period before the preparation of financial statements.
3 Types of Worksheet are;
- General worksheet,
- Detailed worksheet,
- Audit worksheet.
They are explained below,
The general worksheet
The general worksheet contains four to six pairs of columns.
Generally, five pair columns or ten columns worksheets can serve the purpose of general business. These five pair columns are;
- Trial balance,
- Adjusted trial balance,
- An income statement, and
- Balance sheet.
The detailed worksheet
The detailed worksheet is prepared for containing more detailed information over a general worksheet.
Sometimes extra sheets containing columns are enclosed for explaining particular items. The matters for which item-wise lists are to be prepared are:
- Accounts receivable and accounts payable lists,
- Production expenditure lists,
- Insurance premium lists etc.
An audit worksheet is used for preparing financial statements and lists for various uses of business concerns. The audit worksheet is prepared in light of the auditing of various items included in the worksheet.
It is an aid to audit the work of a business concern. The worksheet is a technique of accounting through which the accounting information is integrated for adjustment and classification. The main objective of the worksheet is to verify the accuracy of accounting information before the preparation of financial statements. For preparing an accounting worksheet one must follow 8 Simple Steps to verify accounting information accuracy before preparation of financial statements. Columns of the worksheet are drawn mainly as per necessity. The number of columns of the worksheet depends on the demand of the particular organization.
8 Steps of Preparing Accounting Worksheet
- Name of business organization and preparation date.
- Drawing column and mentioning the head of the column.
- Unadjusted Trial Balance.
- Adjustment column.
- Adjusted trial balance column.
- Income statement column.
- Retained earnings statement.
- Balance sheet.
Example of Ten Column Work-sheet
Example of Twelve Column Work-sheet
You may also like Preparation of adjusted trial balance