1. The Six-Column Worksheet
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The Six-Column Worksheet
Chapter 8

2. Step 6 Accounting Cycle The Work Sheet
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Step 6 Accounting Cycle
The Work Sheet
Working paper used to collect information from the ledger accounts in one place
With the work sheet, the accountant gathers all of the information needed to prepare the financial statements & to complete the other end-of-period activities

3. Work Sheet Sections Heading Account name section Trial balance section
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Work Sheet Sections
Heading
Account name section
All general ledger accounts are listed even if they have a zero balance.
Avoids accidentally omitting an account & ensures that the worksheet contains all accounts needed to prepare the financial reports.
Trial balance section
Income statement section
Balance sheet section
Name of business, name of accounting form, period covered by work sheet
Account numbers & names are from general ledger & listed on work sheet in same order that they appear on general ledger: assets, liabilities, owner’s equity, revenue, expenses

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Balance sheet section
Contains the asset, liability, & owner’s equity accounts
After proving the Trial Balance section, extend or transfer the appropriate amounts to the Balance Sheet section
Extend to appropriate debit or credit column on Balance Sheet

5. Income statement section
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Income statement section
Contains the revenue & expense accounts
Revenues have a normal credit balance
Expense accounts have a normal debit balance

6. Totaling the Income Statement & Balance Sheet Sections
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Totaling the Income Statement & Balance Sheet Sections
Once both sections are totaled, draw a single line across the four Debit & Credit columns indicating that the columns are ready to be added
Showing Net Income or Net Loss on the Work Sheet
Matching principle- requires matching expenses incurred in an accounting period with revenue earned in the same period
Matching revenue w/expenses gives a reliable measure of profit by showing the dollar value of resources used to produce the revenue
Owners & managers use this information to analyze results & make decisions

7. Showing net income on Work Sheet
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Showing net income on Work Sheet
Net Income = Total Revenue – Total Expenses
Entered as a debit at bottom of Income Statement section
Must also be entered as a credit on the balance sheet

8. Net loss Total expenses is greater than total revenue
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Net loss
Total expenses is greater than total revenue
Decreases owner’s equity
Shown as a debit to the capital account
Entered as a credit on income statement & debit on balance sheet