These lectures covers the worksheet, closing accounting entries, permanent account, temporary accounts, classified balance sheet, and reversing accounting entries.
[vc_row][vc_column][vc_video link=”https://youtu.be/v1iepiTO_h8″ title=”Prepare a Worksheet Financial Accounting”][vc_video link=”https://youtu.be/qXhznTqW_qo” title=”Closing Entries Financial Accounting”][vc_video link=”https://youtu.be/9x4NUJJl1JU” title=”Example: Closing Entries”][vc_video link=”https://youtu.be/q1jlkU1-VfI” title=”Correcting Journal entries | Financial accounting |”][vc_video link=”https://youtu.be/4DsQItcKygw” title=”Example: Correcting Journal Entries”][vc_video link=”https://youtu.be/MEkEAww4DHg” title=”Classified Balance Sheet “][vc_video link=”https://youtu.be/85gjPJwUUdk” title=”Example: Classified Balance Sheet”][vc_video link=”https://youtu.be/4tL1U_xWmo0″ title=”Reversing Accounting Entries”][/vc_column][/vc_row]
A worksheet is a multiple-column form used in the adjustment process and in preparing financial statements. As its name suggests, the worksheet is a working tool. It is not a permanent accounting record. It is neither a journal nor a part of the general ledger. The worksheet is merely a device used in preparing adjusting entries and the financial statements. Companies generally computerize worksheets using an electronic spreadsheet program such as Microsoft Excel.
A worksheet is not a journal, and it cannot be used as a basis for posting to ledger accounts. To adjust the accounts, the company must journalize the adjustments and post them to the ledger. The adjusting entries are prepared from the adjustments columns of the worksheet. The reference letters in the adjustments columns and the explanations of the adjustments at the bottom of the worksheet help identify the adjusting entries. The journalizing and posting of adjusting entries follow the preparation of financial statements when a worksheet is used.
Preparing Closing Entries
Companies generally prepare closing entries directly from the adjusted balances in the ledger. They could prepare separate closing entries for each nominal account, but the following four entries accomplish the desired result more efficiently:
- 1.Debit each revenue account for its balance, and credit Income Summary for total revenues.
- 2.Debit Income Summary for total expenses, and credit each expense account for its balance.
- 3.Debit Income Summary and credit Retained Earnings for the amount of net income.
- 4.Debit Retained Earnings for the balance in the Dividends account, and credit Dividends for the same amount.
The balance sheet presents a snapshot of a company’s financial position at a point in time. To improve users’ understanding of a company’s financial position, companies often use a classified balance sheet. A classified balance sheet groups together similar assets and similar liabilities, using a number of standard classifications and sections. This is useful because items within a group have similar economic characteristics.