Chapter 9
THE WORKSHEET
AND THE FINANCIAL
STATEMENTS
Objectives:
1. Record a trial balance on a worksheet.
2. Complete the worksheet.
3. Prepare the income statement, statement
of owner’s equity, and balance sheet from
the worksheet.
Chapter 9
Preparing the Worksheet
• The worksheet is usually prepared
in pencil since it is a plan for the
final reports.
Chapter 9
Preparing the Worksheet (continued)
• Debits for Balance Sheet items are
listed in the Debit column of the
Balance Sheet section.
• Credits for Balance Sheet items are
listed in the Credit column of the
Balance Sheet section.
Chapter 9
Preparing the Worksheet (continued)
• Credits for Income Statement items
are listed in the Credit column of
the Income Statement section.
• Debits for Income Statement items
are listed in the Debit column of the
Income Statement section.
Chapter 9
Determining the Result of
Operations
• The total of the Debit column in the
Income Statement section shows
the total expenses for the period.
• The total of the Credit column in the
Income Statement section shows
the total revenue for the period.
Chapter 9
Determining the Result of
Operations (continued)
•The difference between the Debit and
Credit columns in the Income
Statement section is the net income
(or net loss) from operations. (When
revenue is greater than expenses,
the result is net income. When
expenses are greater than revenue,
the result is a net loss.
Chapter 9
Preparing the Financial Statements
• Information from the worksheet can
be used to prepare the balance
sheet, the income statement and
the statement of owner’s equity.
Chapter 9
Accounting Terminology
•Account-form balance sheet
•Report-form balance sheet
•Worksheet
Chapter 9
Chapter Summary
• A special form known as a
worksheet is often used to compute
the net income or net loss and to
plan the financial statements before
they are prepared.
Chapter 9
Chapter Summary (continued)
• The trial balance is completed in
the first two money columns of the
worksheet.
• The net income or net loss is the
difference between the totals of the
Debit and Credit columns in the
Income Statement section of the
worksheet.
Chapter 9
Chapter Summary (continued)
• The net income is recorded in two
columns of the worksheet -- the Debit
column of the Income Statement
section and the Credit column of the
Balance sheet section.
• A net loss would be recorded in the
Credit column of the Income Statement
section and the Debit column of the
Balance Sheet section.
Chapter 9
Chapter Summary (continued)
• The Income Statement is prepared
from the figures in the Income
Statement columns of the worksheet.
• The Statement of Owner’s Equity is
prepared from figures in the owner’s
capital account in the general ledger
and from figures in the Balance Sheet
columns of the worksheet.
Chapter 9
Chapter Summary (continued)
• The Balance Sheet is prepared from
figures in the Balance Sheet columns
of the worksheet and from the ending
capital figure shown on the Statement
of Owner’s Equity.
Chapter 9
Chapter Summary (continued)
• The report-form balance sheet, the
liabilities and owner’s equity are
placed under the assets.
• The account-form balance sheet
shows the assets on the left side and
the liabilities and owner’s equity on the
right side.
Chapter 9
Topic Quiz
Answer the following true/false questions:
1. There is no relationship between the
worksheet and the financial statements.
FALSE
2. The Income Statement is prepared
from the figures in the Income
Statement columns of the worksheet.
TRUE
3. Net income or loss is determined by the
difference between the totals of the
Debit and Credit columns in the
Balance Sheet section of the worksheet.
FALSE
Chapter 9
Investigating on the Internet
Sources of information about worksheets
and financial statements may be available
on the websites of smaller businesses.
As a research assignment, search for a
website that contains information related
to the use of worksheets and financial
statements in business.
End of Presentation