# Copyright © 2001 by M. Ray Gregg. All rights reserved. 1 Using Columns on Financial Statements an out of class lesson for students in Principles of Financial.

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Copyright © 2001 by M. Ray Gregg. All rights reserved. 1 Using Columns on Financial Statements an out of class lesson for students in Principles of Financial Accounting I

Copyright © 2001 by M. Ray Gregg. All rights reserved. 2 Introduction With the presentation of the “debit/credit” process in Chapter 2, students encounter TWO columns in journals, in ledgers, on trial balances, on work sheets, and in working papers designed to prepare financial statements. No wonder that some students (incorrectly) conclude the columns on financial statements are called “debit” and “credit.” They are NOT.

Copyright © 2001 by M. Ray Gregg. All rights reserved. 3 Columns on Financial Statements The columns on financial statements are for the preparer’s and user’s convenience in displaying financial information. Again, they are NOT called debit and credit. In fact, it is sometimes useful to have three or four columns to present the financial information. Generally, the column at the far right is for grand totals – major totals like total assets, total liabilities, etc.

Copyright © 2001 by M. Ray Gregg. All rights reserved. 4 Showing Your Work When one has a calculation to make, move one column to the left, make the calculation, and show the result in the column to the right. Showing the result on the same line will not require it to be “named.” Showing the result on the NEXT line would require an appropriate title for the information. Pictures are usually better than words. Be sure to check out the examples. Click for example Click for example Click for example

Copyright © 2001 by M. Ray Gregg. All rights reserved. 7 Showing Your Work When one has a calculation to make, move one column to the left, make the calculation, and show the result in the column to the right. Showing the result on the same line will not require it to be “named.” Showing the result on the NEXT line would require an appropriate title for the information. Pictures are usually better than words. Be sure to check out the examples. Click for example Click for example Click for example

Copyright © 2001 by M. Ray Gregg. All rights reserved. 9 Showing Your Work When one has a calculation to make, move one column to the left, make the calculation, and show the result in the column to the right. Showing the result on the same line will not require it to be “named.” Showing the result on the NEXT line would require an appropriate title for the information. Pictures are usually better than words. Be sure to check out the examples. Click for example Click for example Click for example

Copyright © 2001 by M. Ray Gregg. All rights reserved. 11 Showing Your Work When one has a calculation to make, move one column to the left, make the calculation, and show the result in the column to the right. Showing the result on the same line will not require it to be “named.” Showing the result on the NEXT line would require an appropriate title for the information. Pictures are usually better than words. Be sure to check out the examples. Click for example Click for example Click for example Click for more explanation

Copyright © 2001 by M. Ray Gregg. All rights reserved. 12 Using THREE Columns Using three columns can provide even MORE information. Should we just give the Trial Balance to someone interested in our financial statements??? Certainly not! We should provide the information in a clear, useable form. Remember the columns are NOT debit and credit, so don’t be confused by using three columns. Have a calculation to make? Move over a column and take the result back to the column on the right.