Presentation on theme: "LESSON 6-1 WORK SHEET FOR A SERVICE BUSINESS"— Presentation transcript:
1 LESSON 6-1 WORK SHEET FOR A SERVICE BUSINESS 4/22/2017CHAPTER 6WORK SHEET FOR A SERVICE BUSINESS
2 Fiscal Period: The length of time for which a business 6-1 CREATING A WORK SHEETFiscal Period: The length of time for which a businesssummarizes and reports financial information.1 Month, 6 Months, 1 YearBusiness can choose length which suit their needs. Period canbe any date, though most businesses begin on the first dayof the month.Work Sheet: A columnar accounting form used tosummarize the general ledger information needed toprepare financial statements.
3 PREPARING THE HEADING OF A WORK SHEET page 153Name of Company1Name of Report2Date of Report3Trial Balance: A proof of the equality of debits and creditsin the general ledger.-Account titles listed in the same order as chart of accounts.-All accounts are listed even if they do not have a balance.
4 PREPARING A TRIAL BALANCE ON A WORK SHEET page 15421. Write the general ledger account titles.2. Write the general ledger debit account balances. Write the general ledger credit account balances.143. Rule a single line across the two Trial Balance columns.4. Add both the Trial Balance Debit and Credit columns.5. Write each column’s total below the single line.36. Rule double lines across both Trial Balance columns.56
5 6-2 PLANNING ADJUSTING ENTRIES ON A WORK SHEET LESSON 6-14/22/20176-2 PLANNING ADJUSTING ENTRIES ON A WORK SHEETAdjustments: Changes recorded on a work sheet to updategeneral ledger accounts at the end of a fiscal period.-Assets like supplies and prepaid insurance are used to earn revenue.-What we have actually used to earn revenue become expenses.-We use the work sheet to plan adjustments4 Questions we ask when analyzing adjustments:1. What is the balance?2. What should the balance be?3. What must be done to correct the account balance?4. What adjustment is made?Look at pages
6 SUPPLIES ADJUSTMENT ON A WORK SHEET page 1582311. Write the debit amount.2. Write the credit amount.3. Label the two parts of this adjustment.
7 PREPAID INSURANCE ADJUSTMENT ON A WORK SHEET page 1592311. Write the debit amount.2. Write the credit amount.3. Label the two parts of this adjustment.
8 PROVING THE ADJUSTMENTS COLUMNS OF A WORK SHEET page 1601231. Rule a single line.2. Add both the Adjustments Debit and Credit columns. Write each column’s total.3. Rule double lines.
9 PREPARING A WORK SHEET 1. Write the heading. page 160 C1. Write the heading.2. Record the trial balance.3. Record the supplies adjustment.4. Record the prepaid insurance adjustment.5. Prove the Adjustments columns.6. Extend all balance sheet account balances.7. Extend all income statement account balances.8. Calculate and record the net income (or net loss).9. Total and rule the Income Statement and Balance Sheet columns.
11 6-3 EXTENDING BALANCE SHEET ACCOUNT BALANCES ON A WORK SHEET LESSON 6-14/22/20176-3 EXTENDING BALANCE SHEET ACCOUNT BALANCES ON A WORK SHEETpage 162At the end of each fiscal period, TechKnow prepares two financial statements frominformation on the worksheet.Balance Sheet: Reports assets, liabilities, and owner’s equity on a SPECIFIC Date.2131. Debit balances without adjustments2. Debit balances with adjustments3. Credit balances without adjustments
12 EXTENDING INCOME STATEMENT ACCOUNT BALANCES ON A WORK SHEET page 163Income Statement: A financial statement showing revenue and expenses for fiscal period called an income statement.1231. Sales balance2. Expense balances without adjustments3. Expense balances with adjustments
13 RECORDING NET INCOME, AND TOTALING AND RULING A WORK SHEET page 164Revenue > Expenses = Net Income41235671. Single rule2. Totals4. Extend net income6. Totals3. Net income5. Single rule7. Double rule
14 CALCULATING AND RECORDING A NET LOSS ON A WORK SHEET page 165Expenses > Revenue = Net Loss12341. Single rule2. Totals3. Net loss4. Extend net loss