Notes

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Creating a Worksheet
Consistent Reporting – the same accounting procedures
are followed in the same way in each accounting period.
Fiscal Period – length of time for which a business
summarizes and reports financial information (1 yr, 3
months etc.)
Accounting Period Cycle – applied when changes in
financial information are reported for a specific period of
time in the form of financial statements.
Worksheet – columnar accounting form used to
summarize the gen. ledger needed to prepare Financial
Statements.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
2
PREPARING THE HEADING OF A
WORK SHEET
1
2
page 153
Name of Company
Name of Report
3
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
Date of Report
LESSON 6-1
3
TRIAL BALANCE - A proof of the equality of
debits and credits in a general ledger
2
1
3
5
1. Write the general ledger
account titles.
2. Write the general ledger
debit account balances.
Write the general ledger
credit account balances.
3. Rule a single line across the
two Trial Balance columns.
4
4. Add both the Trial Balance
Debit and Credit columns.
5. Write each column’s total
below the single line.
6. Rule double lines across
6 both Trial Balance columns.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-1
4
TERMS REVIEW
page 155
Trial Balance –
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-1
5
Do Now:
 Take out 6.1 OYO
 Why do we create a Trial Balance? Why is it
important?
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-2
Planning Adjustments on a
Worksheet
-Example: You purchase supplies in August.
-You use some supplies throughout the month and some are left
for September.
-Only the value of the supplies used in August should be
reported as expenses in August.
CONCEPT: Matching Expenses with Revenue
Amounts that helped earn revenue for a period must be
reported as expenses in the same period.
Changes must be made on the worksheet to account for those
supplies used and to determine how much is left in the supplies
account.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
7
Adjustments – Changes recorded on a
worksheet to update all general ledger accounts
Each time supplies are bought we debit the Supplies
account.
Supplies on hand are items of value owned by a business
until the supplies are used.
The value of supplies that are used becomes an expense to
the business.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-2
Transaction: On August 31, Ms. Park counted
the supplies on hand and found that the value of
supplies still unused on that date was $310.00.
Beg. Balance 8/31: $1,025
8
Ending Balance 8/31 $310.00
1. Write the debit amount.
2. Write the credit amount.
3. Label the two parts of this adjustment.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-2
9
On August 31, Ms. Park checked the insurance records
and found that the value of insurance coverage
remaining was $1,100. The value of the insurance
coverage used during the fiscal period is:
2
3
1
1. Write the debit amount.
2. Write the credit amount.
3. Label the two parts of this adjustment.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-2
10
PROVING THE ADJUSTMENTS COLUMNS
page 160
OF A WORK SHEET
1
2
1. Rule a single line.
2. Add both the Adjustments Debit and Credit columns.
Write each column’s total.
3. Rule double lines.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
3
LESSON 6-2
11
PREPARING A WORK SHEET
page 160 C
1. 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.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-2
12
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-2
13
1
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-2
14
1
2
496400
10000
15000
10000
102500
120000
6
(a)
(b)
71500
10000
20000
5000
500000
4
62500
356500
356500
21300
(b)
10000
(a)
71500
2800
30000
Net Income
8
20000
5000
500000
3
62500
11000
881500 881500
10000
31000
110000
81500
21300
10000
2800
7
30000
71500
5
11000
81500 146600 356500 734900 525000
209900
209900
356500 356500 734900 734900
9
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-2
15
TERM REVIEW
page 161
 adjustments
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-2
LESSON 6-3 Extending Financial
Statement Information
on a Work Sheet
Balance Sheet - a financial statement that reports
assets, liabilities, and owner’s equity on a specific
date
Income Statement - a financial statement showing
the revenue and expenses for a fiscal period
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
17
EXTENDING BALANCE SHEET ACCOUNT
page 162
BALANCES ON A WORK SHEET
2
1. Debit balances without adjustments
2. Debit balances with adjustments
3. Credit balances without adjustments
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
1
3
LESSON 6-3
18
EXTENDING INCOME STATEMENT ACCOUNT
BALANCES ON A WORK SHEET
page 163
1
2
3
1. Sales balance
2. Expense balances without adjustments
3. Expense balances with adjustments
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-3
19
Net Income
 Net Income – the difference between total revenue
and total expenses when total revenue is greater
If Income Statement’s Credits are greater than
Debits there is a NET INCOME
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-3
20
RECORDING NET INCOME, AND
TOTALING AND RULING A WORK SHEET
4
1. Single rule
2. Totals
3. Net income
3
4. Extend net income
5. Single rule
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
6
page 164
1
2
7
5
6. Totals
7. Double rule
LESSON 6-3
21
Net Loss
 Net Loss - the difference between total
revenue and total expenses when total
expenses are greater
If Income Statement’s Debits are greater than
Credits, there is a NET LOSS
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-3
22
CALCULATING AND RECORDING A NET
LOSS ON A WORK SHEET
page 165
1
3
1.
2.
3.
4.
Single rule
Totals
Net loss
Extend net loss
6
5. Single rule
6. Totals
7. Double rule
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
5
4
7
2
LESSON 6-3
23
TERMS REVIEW




page 166
balance sheet
income statement
net income
net loss
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-3
LESSON 6-4
Finding and Correcting
Errors on the Work Sheet
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
25
CORRECTING AN ERROR IN POSTING TO
page 168
THE WRONG ACCOUNT
2 Correct entry
1 Incorrect entry
1. Draw a line through the entire incorrect entry. Recalculate the account
balance and correct the work sheet.
2. Record the posting in the correct account. Recalculate the account
balance, and correct the work sheet.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-4
26
CORRECTING AN INCORRECT AMOUNT
page 169
2
1
3
1. Draw a line through the incorrect amount.
2. Write the correct amount just above the correction in the same space.
3. Recalculate the account balance, and correct the account balance on
the work sheet.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-4
27
CORRECTING AN AMOUNT POSTED TO
THE WRONG COLUMN
page 169
2
1
3
5
4
6
4. Draw a line through the incorrect item in the account.
5. Record the posting in the correct amount column.
6. Recalculate the account balance, and correct the work sheet.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-4
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