Work Sheet for a Service Business Chapter 6

CHAPTER GOALS: Prove debits = credits through Trial Balance Calculate adjustment for supplies and prepaid insurance Complete a work sheet Correct accounting errors Define and apply accounting terms

STANDARDS: 15.1.12.L. Describe and explain the criteria used to determine expenses and journalize the expense transactions. 1.1.11F – Identify, define, and apply key vocabulary 1.1.11D – Identify, describe, and analyze key concepts in chapter. 2.2.11A – Develop and use computation concepts with real numbers.

New Vocabulary Adjustments Balance sheet Fiscal period Income Statement Net Income Net Loss Trial Balance Work sheet

The Work Sheet Purpose: To prove debits = credits To plan needed changes to ledger accts. to bring balances up to date To separate acct. balances according to financial statements to be prepared To calculate the amount of net income or net loss

The Work Sheet 5. Acts as a planning tool 6. Used to create consistent reporting – when the same acct. procedures are followed for each acct. period. 7. Summarized by fiscal period 8. Helps to report changes for a fiscal period for financial statements – “Accounting Period Cycle”

Creating the Work Sheet Heading: Who, What, When Name of Business, Name of Report, Date Trial Balance – includes ALL accts.; in order of chart of accounts MUST equal Adjustments: represents changes in ledger acct. balances Income Statement – includes temporary accts. Balance Sheet – includes permanent accts.

PREPARING THE HEADING OF A WORK SHEET page 153 Name of Company Name of Report Date of Report – For fiscal period

PREPARING A TRIAL BALANCE ON A WORK SHEET page 154 2 1. Write the general ledger account titles. 2. Write the general ledger debit & credit account balances. 1 4 3. Rule a single line across the two Trial Balance columns. 4. Add both the Trial Balance Debit and Credit columns. 5. Rule double lines across both Trial Balance columns. 3 5

ERRORS IN ACCOUNTING Mathematical – addition/subtraction, etc. Transposition – switch #’s $450 - $540 Slide – movement of decimal $100.00 - $1,000.00 Omitted amount Recorded in incorrect column Normal balance side