1. The Six-Column Work Sheet
Chapter 8

2. These steps are performed frequently during a cycle
The Accounting Cycle
These steps are performed frequently during a cycle
Collect and verify source documents
Analyze each transaction
Journalize each transaction
Post to the ledger
Trial balance
These steps are only performed at the end of an Accounting Cycle 6. Work Sheet 7. Prepare financial statements 8. Journalize and post closing entries 9. Prepare a post-closing trial balance
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3. What is the purpose of a Work Sheet?
A Work Sheet is a working paper used to collect information from the ledger accounts in one place
Sections of a work sheet
The heading
The Account Name section
The Trial Balance section
The Income Statement section
The Balance Sheet section
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4. Report Headings Headings answer the questions: Who, What and When
Ex: Roadrunner Delivery Service ---Who
Work Sheet ---What
For the Month Ended October 31, When
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5. The Account Name Section and Trial Balance Section
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This information comes from the ledger and is filled out much like a trial balance report is filled out.

6. Ruling and Totaling a Work Sheet
Ruling means to draw a line. In accounting a single rule means that the entries above the rule are ready to be totaled. After the totals have been proven to equal, a double rule is drawn under them.
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7. The Balance Sheet and Income Statement Sections
These are both financial statements prepared at the end of the accounting period. The work sheet organizes the information for these reports
The Balance Sheet Section – contains Assets, Liabilities, and Owner’s Equity accounts
The Income Statement Section – contains the Revenue and Expense accounts
Single rule and then total all columns.
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8. Balance Sheet and Income Statement Accounts
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9. Balance Sheet and Income Statement Totals

10. Showing Net Income or Net Loss
Matching Principal – according to GAAP expenses incurred in an accounting period must match with the revenue earned in the same period
Net Income – the amount of revenue that remains after expenses for the period have been subtracted
Net Loss – happens when total expenses exceed total revenue

11. To Record Net Income or Loss
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Determine if Revenue or Expenses is the larger number, then subtract the two numbers.
Skip a line under the account names and write Net Income if the Revenue column is higher or Net Loss if the Expense column is higher.
Write the difference between the two columns on the same row as the words New Income or Net Loss under the smaller of the two totals
On the same line, write that same number under the total in the Balance Sheet section that is opposite of the Income Statement column.
Ex If you wrote it in the Debit column on the Income Statement section then write it in the Credit column on the Balance Sheet section

12. Worksheet with Net Income
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13. It Stands to Reason
If Revenue (a credit) is larger than expense the business made a profit, that amount is then recorded under the debit column to bring expenses equal to revenue.
If the business made a profit, that amount would be added to the Capital account (a credit) which is the offset of the amount added to the expense account as a debit.

14. Completing the Work Sheet
Draw a single rule under the entire Net Income or Net Loss area.
Add all columns down
Check that the debit and credit columns of the Income Statement balance and that the debit and credit columns of the Balance Sheet columns balance
Once everything is in balance, double rule the entire totals line.

15. Complete Work Sheet

16. A Net Loss