Accounting & Finance Accounting & Finance Chapter 6 Chapter 6 Work Sheet for a Service Business Work Sheet for a Service Business
Accounting Finance Chapter 6 Work Sheet for a Service Business.
Jan 18, 2018
Chapter 6 Vocabulary Fiscal PeriodFiscal Period –Length of time for which a business summarizes and reports financial information. Period chosen that meets need of businessPeriod chosen that meets need of business –EX: Monthly, Quarterly, Yearly Work SheetWork Sheet –Columnar accounting form used to summarize the general ledger information needed to prepare financial statements. Trial BalanceTrial Balance –Proof of the equality of debits and credits in a general ledger.
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Accounting & FinanceAccounting & FinanceChapter 6Chapter 6
Work Sheet for a Service BusinessWork Sheet for a Service Business
Chapter 6 Key ConceptsChapter 6 Key Concepts• Consistent ReportingConsistent Reporting
– The same accounting procedures are followed in The same accounting procedures are followed in the same way in each accounting period.the same way in each accounting period.
• Matching Revenue with ExpensesMatching Revenue with Expenses– Revenue earned and the expenses incurred to Revenue earned and the expenses incurred to
earn that revenue are reported in the same fiscal earn that revenue are reported in the same fiscal period.period.
Chapter 6 VocabularyChapter 6 Vocabulary• Fiscal PeriodFiscal Period
– Length of time for which a business Length of time for which a business summarizes and reports financial information.summarizes and reports financial information.• Period chosen that meets need of businessPeriod chosen that meets need of business
– EX: Monthly, Quarterly, YearlyEX: Monthly, Quarterly, Yearly
• Work SheetWork Sheet– Columnar accounting form used to summarize Columnar accounting form used to summarize
the general ledger information needed to the general ledger information needed to prepare financial statements.prepare financial statements.
• Trial BalanceTrial Balance– Proof of the equality of debits and credits in a Proof of the equality of debits and credits in a
general ledger.general ledger.
Creating a Work SheetCreating a Work Sheet 6-16-1
Preparing the Heading of a Work SheetPreparing the Heading of a Work Sheet
Tech KnowWork Sheet
For Month Ended August 31, 20xx
1 Name of Company
2Name of Report
3Date of Report
ACCOUNT TITLETRIAL BALANCE
DEBIT CREDIT1
234
6789
1011121314151617181920
5
Creating a Work SheetCreating a Work Sheet 6-16-1Preparing a Trial Balance on a Work SheetPreparing a Trial Balance on a Work Sheet
1 Account Titles Tech KnowWork Sheet
For Month Ended August 31, 20xx
CashPetty Cash
Accounts Receivable – Kids TimeAccounts Receivable – Learn N PlaySuppliesPrepaid Insurance
Accounts Payable – Ling Music SuppliesAccounts Payable – Sullivan Office SuppliesBarbara Trevino, CapitalBarbara Trevino, Drawing
Income SummarySalesAdvertising ExpenseInsurance ExpenseMiscellaneous ExpenseRent ExpenseSupplies ExpenseUtilities Expense
3Single Rule
2 Account Balances
8272 00200 00100 0020 00
4751 001200 00
1360 0020 00
10000 00600 00
4411 00273 00
10 00250 00
115 004Add and Write Totals
15791 00 15791 00
5Double Rule
Chapter 6-1Chapter 6-1
ACCOUNT TITLETRIAL BALANCE
DEBIT CREDIT1
234
6789
1011121314151617181920
5
Golden TanWork Sheet
For Month Ended February 28, 2001
CashPetty Cash
Accounts Receivable – Ruby PrinceSuppliesPrepaid Insurance
Accounts Payable – Richard NavarroGary Baldwin, CapitalGary Baldwin, Drawing
Income SummarySalesAdvertising ExpenseInsurance ExpenseMiscellaneous ExpenseSupplies ExpenseUtilities Expense
9800 00150 00
2795 00456 00750 00
555 0014885 00
3400 00
4320 00
378 00
1100 0019760 00
WWORKORKTOGETHERTOGETHER
931 00
19760 00
Chapter 6 VocabularyChapter 6 Vocabulary• AdjustmentsAdjustments
– Changes recorded on a work sheet to update Changes recorded on a work sheet to update general ledger accounts at the end of a fiscal general ledger accounts at the end of a fiscal period.period.
6-26-2
ACCOUNT TITLETRIAL BALANCE
DEBIT CREDIT1234
67891011121314151617181920
5
CREDITDEBITADJUSTMENTS INCOME STATEMENT BALANCE SHEET
DEBIT DEBITCREDIT CREDIT
1 2 3 4 5 6 7 8
(a) 2564 00
(a) 2564 00
(b) 100 00
(b) 100 00
Preparing a Work SheetPreparing a Work Sheet 6-26-2
CashPetty CashAcc. Rec. – Kids TimeAcc. Rec. – Learn N PlaySuppliesPrepaid InsuranceAcc. Pay. – Ling MusicAcc. Pay. – Sullivan OfficeBarbara Trevino, CapitalBarbara Trevino, DrawingIncome SummarySales
Advertising ExpenseInsurance ExpenseMiscellaneous ExpenseRent ExpenseSupplies ExpenseUtilities Expense 115 00
8272 00200 00100 0020 00
4751 001200 00
1360 0020 00
10000 00600 00
4411 00273 00
10 00250 00
15791 00 15791 00
Tech KnowWork Sheet
For Month Ended August 31, 20xx1
3
2
4
52664 00 2664 00
8272 00200 00100 0020 00
2187 001100 00 1360 00
20 0010000 00
600 00
4411 00273 00100 0010 00
250 002564 00115 00
6
7
9
3312 00 4411 00 12479 00 11380 001099 00 1099 00
8Net Income 4411 00 4411 00 12479 00 12479 00
Chapter 6 Legal IssuesChapter 6 Legal Issues• Financial LossFinancial Loss
– Did third party suffer lossDid third party suffer loss• Reliance on financial statementsReliance on financial statements
– Did third party actually rely on the financial Did third party actually rely on the financial statements for making decisionstatements for making decision
• Level of negligenceLevel of negligence– Did Accountant fail to exhibit reasonable level Did Accountant fail to exhibit reasonable level
of care? Gross negligence represented by of care? Gross negligence represented by flagrant violation of professional standards.flagrant violation of professional standards.
• Accountant-third partyAccountant-third party– Did the accountant have any reason to believe Did the accountant have any reason to believe
a third party would rely on the statementsa third party would rely on the statements
Four DeterminantsFour Determinants6-26-2
ACCOUNT TITLE TRIAL BALANCEDEBIT CREDIT
1234
67891011121314151617181920
5
CREDITDEBITADJUSTMENTS INCOME STATEMENT BALANCE SHEET
DEBIT DEBITCREDIT CREDIT
1 2 3 4 5 6 7 8
CashPetty CashAcc. Rec. – Kids TimeAcc. Rec. – Learn N PlaySuppliesPrepaid InsuranceAcc. Pay. – Ling MusicAcc. Pay. – Sullivan OfficeBarbara Trevino, CapitalBarbara Trevino, DrawingIncome SummarySales
Advertising ExpenseInsurance ExpenseMiscellaneous ExpenseRent ExpenseSupplies ExpenseUtilities Expense 115 00
8272 00200 00100 0020 00
4751 001200 00
1360 0020 00
10000 00600 00
4411 00273 00
10 00250 00
15791 00 15791 00
Preparing a Work SheetPreparing a Work Sheet 6-26-2
(a) 2564 00(b) 100 00
(b) 100 00
(a) 2564 00
Chapter 6 VocabularyChapter 6 Vocabulary• Income StatementIncome Statement
– Financial statement showing the revenue and Financial statement showing the revenue and expenses for a fiscal periodexpenses for a fiscal period
• Net IncomeNet Income– Difference between total revenue and total Difference between total revenue and total
expenses when total revenue is greaterexpenses when total revenue is greater• Net LossNet Loss
– Difference between total revenue and total Difference between total revenue and total expenses when total expenses is greaterexpenses when total expenses is greater
6-36-3
Finding and Correcting Errors on the Work SheetFinding and Correcting Errors on the Work Sheet 6-46-4Correcting Accounting Errors on the Work SheetCorrecting Accounting Errors on the Work Sheet
•Journal entries not posted to ledgerJournal entries not posted to ledger–Trial Balance columns on work sheet will not equalTrial Balance columns on work sheet will not equal
•Information not transferred correctly from ledger Information not transferred correctly from ledger to work sheetto work sheet
–Trial Balance columns will not equalTrial Balance columns will not equal
•Recording Adjustment information incorrectlyRecording Adjustment information incorrectly–Adjustment columns will not equalAdjustment columns will not equal
•Math Errors when totaling columnsMath Errors when totaling columns
Finding and Correcting Errors on the Work SheetFinding and Correcting Errors on the Work Sheet 6-46-4Correcting Accounting Errors on the Work SheetCorrecting Accounting Errors on the Work Sheet
•Errors in extending balances to either the Errors in extending balances to either the Income Statement or Balance Sheet columnsIncome Statement or Balance Sheet columns
–Balance Sheet and Income Statement differences Balance Sheet and Income Statement differences will not equalwill not equal
•Errors found on Work Sheet must be corrected Errors found on Work Sheet must be corrected before any further work is completedbefore any further work is completed
–Erase errors and replace with correct amountErase errors and replace with correct amount
–This can be done because work sheet is not an This can be done because work sheet is not an official documentofficial document
Checking for Typical ErrorsChecking for Typical Errors• Difference is “1” Such as .01, .10, 1.00Difference is “1” Such as .01, .10, 1.00
– Typically an addition error. Add the columns Typically an addition error. Add the columns againagain
• Difference can be divided evenly by “2”Difference can be divided evenly by “2”– Look for a figure ½ the amount of the error in Look for a figure ½ the amount of the error in
the work sheet. Check to see if it was recorded the work sheet. Check to see if it was recorded in the correct columnin the correct column
• Difference can be divided evenly by “9”Difference can be divided evenly by “9”– Look for transposed numbers such as 54 Look for transposed numbers such as 54
written as 45written as 45– Look for “SLIDE” such as 12.00 entered as Look for “SLIDE” such as 12.00 entered as
120.00120.00
6-46-4
Checking for Typical ErrorsChecking for Typical Errors• Difference is an omitted amountDifference is an omitted amount
– Look for an amount equal to the difference.Look for an amount equal to the difference.– EX: $50 differenceEX: $50 difference
• Check to see if a $50 entry was not extendedCheck to see if a $50 entry was not extended• Look for any $50 entry on the work sheet and check Look for any $50 entry on the work sheet and check
to see if it has been handled correctlyto see if it has been handled correctly• Look in ledger accounts and journal for a $50 entry Look in ledger accounts and journal for a $50 entry
and see if it has been handled correctlyand see if it has been handled correctly
6-46-4
Correcting an Error in Posting to the wrong accountCorrecting an Error in Posting to the wrong account 6-46-4
DATE ITEM POSTREF.
BALANCEDEBIT DEBITCREDIT CREDIT
ACCOUNT ACCOUNT NO.
Feb 1
25
G1
G2
400 00 400 00
90 00 490 00
Supplies 130
Correct EntryCorrect Entry2
DATE ITEM POSTREF.
BALANCEDEBIT DEBITCREDIT CREDIT
ACCOUNT ACCOUNT NO.
Feb 9 G1 600 00 600 00
Prepaid Insurance 140
12 G1 50 00 650 00
1 Incorrect EntryIncorrect Entry
12 G1 50 00 540 00
Correcting an Incorrect Amount and an Amount Correcting an Incorrect Amount and an Amount Posted to the Wrong ColumnPosted to the Wrong Column 6-46-4
DATE ITEM POSTREF.
BALANCEDEBIT DEBITCREDIT CREDIT
ACCOUNT ACCOUNT NO.
Sept. 8 1 700 00 700 00
673 00
Utilities Expense 550
27 0017 1 27 00
Correct AmountCorrect Amount
21Incorrect AmountIncorrect Amount
70 00 70 00
97 00
Correct BalanceCorrect Balance3
5Correct EntryCorrect Entry 4Incorrect EntryIncorrect Entry
6Correct BalanceCorrect Balance
Related Documents
