Accounting Worksheet (Definition) - WallStreetMojo

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Publication Date :

25 Aug, 2019

Blog Author :

WallStreetMojo Team

Edited by :

Ankush Jain

Reviewed by :

Dheeraj Vaidya, CFA, FRM

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Table Of Contents

What is an Accounting Worksheet?

Accounting Worksheet is a spreadsheet tool that records all accounting information and is used to prepare the company's financial statements at the end of the accounting cycle, thereby ensuring its financial accuracy.

• These accounting spreadsheets are designed mainly for internal purposes only where the external users of the company, like investors, creditors, etc., rarely get the chance to see the accounting worksheet of the company.
• Due to this, there is flexibility for the preparer of the accounting worksheet to modify its format to fit the demand of their internal and workflow requirements. So, this is the spreadsheet that helps track each step of the accounting cycle of the company.

Table of contents

• What is an Accounting Worksheet?
  • Components of Accounting Worksheet
    • #1 - Unadjusted Trial Balance
    • #2 - Adjustments
    • #3 - Adjusted Trial Balance
    • #4 - Income Statement
    • #5 - Balance Sheet
  • Example of Accounting Worksheet
  • Advantages of Accounting Worksheet
  • Limitations
  • Conclusion
  • Recommended Articles

Components of Accounting Worksheet

There are five columns of data generally, and each column of data lists the debit entries and the credit entries separately. The following are the five columns of the data in the accounting worksheet:

#1 - Unadjusted Trial Balance

The Unadjusted trial balance used in a concerned year. The total credit and the debit column of the unadjusted trial balance are equal. used in a concerned year. The total credit and the debit column of the unadjusted trial balance are equal. revenue accounts, used in a concerned year. The total credit and the debit column of the unadjusted trial balance are equal.

#2 - Adjustments

All the accounts of the company which require the passing of the adjustment entry will get listed in the adjustment column. The total of credit and the debit column of the balance of the adjustments are equal.

#3 - Adjusted Trial Balance

The adjusted trial balance will be prepared by combining the entries of the previous two columns, Unadjusted trial balance and adjustments. The total credit and the debit column of the adjusted trial balance are equal.

#4 - Income Statement

Income statement column contains the values concerning the expenses and revenue accounts only. In this case, if the value of total revenue exceeds the expense column, then the difference will be the net income of the company's year as it is earning more revenues in the year than what it is spending on its expenses.

On the other hand, if the expenses total for the year exceeds the revenue total, then the difference will be the net loss of the company's year as it is spending more on its expenses than what it is earning. In either of the cases, a balancing entry must be passed by the company for the difference.

#5 - Balance Sheet

Balance sheet column contains the values concerning the assets, liabilities, and owner's capital only. The total credit and the debit column of the Balance sheet will be equal.

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Example of Accounting Worksheet

Prepare an accounting worksheet. Company XYZ Ltd. runs a bakery business. During the year before preparing the final statements of accounts, it decided to develop an accounting spreadsheet as an intermediate step. During the year, two adjustments were made, including the payment of rent of $1,500 in advance and the depreciation expense of $2,000. The unadjusted trial balance of the company is given in column 1.

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Advantages of Accounting Worksheet

1. With the help of the accounting spreadsheet, it becomes easy to complete the process of preparation of financial statements of the firm step-by-step. It is one of the essential tools for developing the income statement and the company's balance sheet. While the use of the same is not compulsory, it is a practical step.
2. It ensures that the company's bookkeeper does not forget while preparing the books to pass the adjustments required.
3. It provides information about the company's financial health before the company's actual financial statement is prepared.

Limitations

They are prepared manually and separately from the company's accounting database, so there are chances that the accounting worksheets made may contain errors or inaccuracies in the formula. The concerned person must review them before relying on summary totals carefully.

Conclusion

A worksheet is a useful tool to ensure that the accounting entries are correct. An accounting spreadsheet of the company is a document used within the accounting department to calculate and analyze the account balances. All the accounts of the accounting records of the company are shown in the accounting worksheet in at-least one of the columns, which is an essential step for preventing the errors when the company’s final financial statements are prepared.

So, it shows all of the significant steps of the accounting cycle of the company side by side. While the use of the same is not compulsory, it is one of the essential tools for preparing the income statement and the company's balance sheet.

Recommended Articles

This has been a guide to What is an Accounting Worksheet and its Definition. Here we discuss components of the accounting worksheet along with its example, advantages, and disadvantages. You can learn more about accounting from the following articles –

• Responsibility Accounting
• Non-Profit Accounting
• Post Closing Trial Balance
• Suspense Account Meaning

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