ETHICS, LAW, AND THE JUDICIAL SYSTEM

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THE WORKSHEET AND THE FINANCIAL STATEMENTS
Chapter 9
Objectives
1. Record a trial balance on a worksheet. 2.
Complete the worksheet. 3. Prepare the income
statement, statement of owners equity, and
balance sheet from the worksheet.
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Chapter 9
Preparing the Worksheet

• The worksheet is usually prepared in pencil since
  it is a plan for the final reports.

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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.

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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.

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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.

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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.

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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 owners equity.

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Chapter 9
Accounting Terminology

• Account-form balance sheet
• Report-form balance sheet
• Worksheet

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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.

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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.

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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.

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Chapter 9
Chapter Summary (continued)

• The Income Statement is prepared from the figures
  in the Income Statement columns of the worksheet.
• The Statement of Owners Equity is prepared from
  figures in the owners capital account in the
  general ledger and from figures in the Balance
  Sheet columns of the worksheet.

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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 Owners Equity.

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Chapter 9
Chapter Summary (continued)

• The report-form balance sheet, the liabilities
  and owners equity are placed under the assets.
• The account-form balance sheet shows the assets
  on the left side and the liabilities and owners
  equity on the right side.

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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
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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.

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End of Presentation
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1. There is no relationship between the
worksheet and the financial statements.
FALSE The financial statements are prepared from
the data recorded in the worksheet.
(Return to Topic Quiz)
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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 . . .between the totals of the Debit and
Credit columns in the Income Statement section of
the worksheet.
(Return to Topic Quiz)