The Six-Column Work SheetThe Six-Column Work Sheet
The Sixth Step of the Accounting Cycle: The Work Sheet
• A work sheet a working paper that is used to collect
information from the ledger accounts in one place.
• It is a tool used by accountants to help them prepare
financial statements and complete end-of-fiscal
period activities.
The Sixth Step of the Accounting Cycle: The Work Sheet
• A work sheet a working paper that is used to collect
information from the ledger accounts in one place.
• It is a tool used by accountants to help them prepare
financial statements and complete end-of-fiscal
period activities.
The Work Sheet HeadingThe Work Sheet Heading
(1) The name of the business(1) The name of the business
(2) The name of the
accounting form
(2) The name of the
accounting form
(3) The period covered by the
work sheet
(3) The period covered by the
work sheet
(Who?
)
(Who?
)(What?
)
(What?
)
(When?
)
(When?
)
(1)(2)
(3)
The Account Name and Trial Balance Sections
• Information in these sections come from the general ledger accounts!
• All accounts are listed, even those with zero balances.
The Account Name and Trial Balance Sections
• Information in these sections come from the general ledger accounts!
• All accounts are listed, even those with zero balances.
Ruling and Totaling the Trial Balance SectionRuling and Totaling the Trial Balance Section
• Ruling means “drawing a line”. In accounting a single rule drawn under a column of amounts means that the entries above the rule are to be added or subtracted.
• Total the debits and the credits. If they are equal then you are ready to double rule.
• A double rule means the amounts just above are totals, they are equal and that no other entries will be made below them.
Ruling and Totaling the Trial Balance SectionRuling and Totaling the Trial Balance Section Total debits must equal total credits.
The Balance Sheet SectionThe Balance Sheet Section
This contains the balance sheet accounts:
• Assets
• Liabilities
• Owner’s Equity
• After the Trial Balance section is proved, the next step is to extend, or transfer, the appropriate amounts to the Balance Sheet section.
This contains the balance sheet accounts:
• Assets
• Liabilities
• Owner’s Equity
• After the Trial Balance section is proved, the next step is to extend, or transfer, the appropriate amounts to the Balance Sheet section.
The Balance Sheet SectionThe Balance Sheet Section
The Income Statement SectionThe Income Statement Section
This contains the income statement accounts:
• Revenues
• Expenses
• After the Trial Balance section is proved
and the Balance Sheet section has been transferred, the next step is to extend, or transfer, the appropriate amounts to the Income Statement section.
This contains the income statement accounts:
• Revenues
• Expenses
• After the Trial Balance section is proved
and the Balance Sheet section has been transferred, the next step is to extend, or transfer, the appropriate amounts to the Income Statement section.
The Income Statement SectionThe Income Statement Section
Totaling the Income Statement and Balance Sheet SectionsTotaling the Income Statement and Balance Sheet Sections
1) A single rule is drawn across the four debit and credit columns to indicate that the columns are ready to be added.
2) After the four columns are totaled, notice that the debit and credit columns in each section are not equal.
• The column totals will NOT equal until the net income or net loss for the period is added.
1) A single rule is drawn across the four debit and credit columns to indicate that the columns are ready to be added.
2) After the four columns are totaled, notice that the debit and credit columns in each section are not equal.
• The column totals will NOT equal until the net income or net loss for the period is added.
Totaling the Income Statement and Balance Sheet SectionsTotaling the Income Statement and Balance Sheet Sections
Showing Net Income on the Work SheetShowing Net Income on the Work Sheet
In accounting, expenses incurred in an accounting period are matched with the revenue earned during the same period. This is called the matching principle.
Matching expenses of a period with revenue of the same period provides a reliable measure of profit, because it shows the cost of producing the revenue.
In accounting, expenses incurred in an accounting period are matched with the revenue earned during the same period. This is called the matching principle.
Matching expenses of a period with revenue of the same period provides a reliable measure of profit, because it shows the cost of producing the revenue.
Showing Net Income on the Work SheetShowing Net Income on the Work Sheet
Net Income is the amount of revenue that remains after expenses for the period are subtracted.
• Skip a line after the last account and write the words “Net Income” in the Account Name Column.
• On the same line, enter the net income amount in the Income statement debit column.
• On the same line, enter the net income amount on the Balance sheet credit column.
Net Income is the amount of revenue that remains after expenses for the period are subtracted.
• Skip a line after the last account and write the words “Net Income” in the Account Name Column.
• On the same line, enter the net income amount in the Income statement debit column.
• On the same line, enter the net income amount on the Balance sheet credit column.
Showing Net Income on the Work SheetShowing Net Income on the Work Sheet
Completing the Work SheetCompleting the Work Sheet1) On the line under the net income amount, draw a single
rule across the four columns.
2) In the Income Statement section debit column, add the net income amount to the previous total and enter the new total. Bring down the total of the Income Statement section credit column. Total debits should equal total credits.
3) In the balance sheet section credit column, add net income to the previous total and enter the new total. Bring down the total of the Balance sheet section debit column. The total debit amount should equal the total credit amount.
4) In the Balance Sheet and Income Statement sections, draw a double rule under the four column totals. The double rule indicates that the debit and credit columns are equal and that no more amounts are to be entered in these columns.
1) On the line under the net income amount, draw a single rule across the four columns.
2) In the Income Statement section debit column, add the net income amount to the previous total and enter the new total. Bring down the total of the Income Statement section credit column. Total debits should equal total credits.
3) In the balance sheet section credit column, add net income to the previous total and enter the new total. Bring down the total of the Balance sheet section debit column. The total debit amount should equal the total credit amount.
4) In the Balance Sheet and Income Statement sections, draw a double rule under the four column totals. The double rule indicates that the debit and credit columns are equal and that no more amounts are to be entered in these columns.
Completing the Work SheetCompleting the Work Sheet
The Effects of Income or Loss on Capital
The Effects of Income or Loss on Capital
Revenue > Expenses = Net Income
Capital Increases
Revenue < Expenses = Net Loss
Capital Decreases
Revenue > Expenses = Net Income
Capital Increases
Revenue < Expenses = Net Loss
Capital Decreases
