Example of a work sheet balance – A company’s financial statements need to be prepared neatly and systematically so that it is easily understood by many interested parties. One component of accounting books that makes it easier for the preparation of financial statements to be seen systematically is the work sheet.
The work sheet will make it easier to prepare financial reports because the financial data contained in it is fairly complete. The following is a detailed review of the work sheet and its functions.
Definition of a work balance
Worksheet or work sheet is a sheet that contains company accounting data for one period. The preparation of this work sheet plays an important role for the company because it will make it easier to recap data before adjustments are made.
The work balance is a component used to check the general ledger after adjustment. The general ledger check after this adjustment is also carried out to ensure that the balance is in balance.
The format of this work sheet consists of 10 columns to record account numbers and names along with debit/credit balances. This column is used to enter company data, starting from the trial balance, adjustments, to producing the latest financial reports.
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Purpose of Making a Line Balance
The work balance is a component needed by company managers and other external parties, including investors. This component will make it easier for the company to make predictions about what might happen in the future for the company.
Preparing a work sheet also makes it easier for companies to control their finances, because each report is clearly exposed.
Apart from that, of course there are still some purposes for making this work sheet in detail. The following are some of the objectives of preparing a work sheet that must be known.
1. Facilitate the Preparation of Financial Statements
The first purpose of making a work sheet is to make it easier to prepare financial reports. Preparation of a work sheet will be carried out first before compiling financial reports so that the data to be used is systematically arranged.
The strip balance helps classify data coming from the general ledger, giving it a concise appearance. Making financial reports can immediately see the work sheet without having to re-collect the company’s bookkeeping data from the start.
A great deal of information will be contained in the work sheet, including data from adjustments. The preparation of financial statements can be done more quickly if a work sheet has been prepared. The company’s work sheet will also help facilitate the auditing process.
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2. Means of Classifying and Summarizing Trial Balance Information
Trial balance information is the main basis used to prepare financial statements. The company obtains this trial balance information from posting ledgers that are made after recording transactions.
Making a work sheet in this case will help the company to summarize the trial balance information to make it simpler. In addition, this component also helps classify the accounts in the trial balance according to their group, so that the arrangement will be sequential.
This summary of trial balance information will make it easier for the company when checking the general ledger, to ensure that the results are in balance. Furthermore, the summary information will be reprocessed in the work sheet by including adjustment components.
3. Minimizing Errors
The purpose of making the next work sheet is to minimize any future report errors. The concise work sheet format makes it easy for users to understand the data in it. In addition, a simple work sheet arrangement will also help companies find data quickly.
Company bookkeeping errors generally occur during the process of preparing financial statements due to the many components that must be taken into account. The potential for this error will occur when the party concerned is not careful in analyzing bookkeeping data.
Companies can minimize these errors by making financial reports in advance. Financial reports can be prepared with reference to the work sheet because they are not confusing to understand and have a concise appearance, thereby minimizing input errors.
4. Estimating Things That Might Happen
Business continuity is one important thing to consider. Companies can predict things that might happen in the continuity of their business through the work sheet.
One of the estimates that can be seen in the work sheet is the balance of cash and debt. The company can estimate how to distribute the cash balance and pay off its obligations.
Companies can also view the most recent capital balance in the work sheet to use as operating turnover. The balance value on the work sheet is relevant enough to be used to predict what will happen, even though a complete and more detailed financial report has not yet been prepared.
Worksheet Function
Making a work sheet has several functions that are quite important in financial reporting for one period. Here are some functions of making a work sheet that you need to know.
a) Used to Summarize Data
The first function of preparing a work sheet is to summarize the company’s financial data. The data can be seen from journals to ledger postings. The work sheet can summarize the balances that have been posted through the ledger.
The data in the ledger consists of many columns, making it quite difficult to use as a benchmark for preparing financial reports. Plus because there are too many sheets. This can be overcome by the existence of a work sheet which will summarize the data from the ledger.
The summary data in the work sheet is sufficient to represent the company’s financial condition in one period. Other bookkeeping documents can still be kept for further auditing.
b) Evaluating Existing Transactions
Evaluation of transactions that have occurred during a period can also be seen in the work sheet. The way to evaluate transactions through the work sheet is to look at changes in the balances in each account.
Using the trial balance as a reference for evaluating transactions will make checking more efficient. Companies can also quickly find changes in balances on certain accounts.
The function of evaluating through the work sheet is so that the company can find out the development of operational activities during an accounting period. The results of evaluating transactions in the work sheet can be used as material for decision making.
c) Means of Compiling Reports
The main function of preparing a work sheet is to serve as a basis for compiling financial reports. There are a lot of components to be included in the financial statements, so a work sheet is needed so that the preparation process can be more efficient.
The work sheet will also help display the latest profit and loss and balance sheet data which can be used as a basis for compiling company reports. Next, the company can start compiling a statement of changes in equity from profit and loss provided through the work sheet.
d) Creditable Company Procedures
The work sheet is included in the procedure for preparing credible accounting for companies. The company’s financial records are considered complete and qualified if they include a trial balance in them. In addition, the quality of bookkeeping cannot be doubted with this component.
This preparation procedure actually must be fulfilled by the company in case there is auditing from an external party at any time. Making this work sheet will later make it easier for companies to explain financial developments in one period.
d) Seeing the Company’s Daily Activities
The relationship between the work sheet and transaction evaluation is to see the company’s daily activities. In general, companies that are running well have transaction records every day. This transaction will be more concise if it has been classified through the work sheet.
The company’s daily activities will initially be accompanied by supporting documents to be recorded in the journal. Furthermore, changes in the balance of each account due to transactions within the company will be deducted into the general ledger.
The balance in the ledger is a source for viewing the company’s daily activities and changes in account balances. Evaluation of these daily activities can be used to decide what transactions the company will carry out to support operational activities.
Example of a column balance and how to make a column balance
The next thing you need to know about a work sheet is how to make it. There are several components that must be included in the work sheet so that it can be used on an ongoing basis. The following is a review regarding how to prepare a work sheet.
1. Create a Balance Sheet Format
The worksheet has its own format in making it look more concise. In general, the format used to prepare a work sheet is using 10 columns. This format consists of a number, account name, and credit debit.
Each of these components is interconnected because the calculation is based on a trial balance and adjustments. The profit and loss component and work sheet will experience a classification based on the type of account that must be in it.
2. Fill in the Account Number and Account Name
The next step that must be carried out after preparing the work sheet format is to start filling in the account number and name. This filling must be done starting from the smallest account number so that it looks neater.
The number that must be entered into the trial balance represents the classification of the account type. The sequence for filling in the account number and name starts from assets, liabilities, equity, income, and expenses. Filling in the number and account name sequentially makes it easy to input the next transaction.
Filling in this work sheet can be based on the list of accounts that have been made at the beginning of the period. Companies can also fill in additional accounts that may be needed in the period concerned so that there are no missed transactions.
3. Fill in the Adjusting Journal Column
The next step in preparing a work sheet is to fill in the adjusting journal column. This adjusting journal component consists of two columns, namely debit and credit. The position of the adjusting journal column is next to the trial balance.
The data entered in the adjustment column comes from adjustment transactions that occur at the end of the period. This adjustment transaction occurs due to changes in the balance in certain accounts that require recording.
Filling in this component can be done based on adjusting journal entries for debit and credit locations. Filling in this adjustment must be done carefully because this component is important to see the latest balance for a particular account, one of which is the change in accumulated depreciation.
4. Adding Nominal to the Trial Balance After Adjustment
The next component in the work sheet is the nominal on the trial balance after adjustment. The calculation is done by accumulating balance sheets and adjusting journals to find out the latest balance as a whole.
The trial balance after adjustment is useful to find out the latest nominal for each account as a whole. Make sure that the nominal entered is correct so that at the end of the calculation the balance will remain balanced.
5. Fill in the Balance Sheet and Profit and Loss Columns
The next column that must be filled in in the work sheet is the profit and loss component. The type of account that must be included in the income statement is a real account. The balance of the account is obtained from the adjusted nominal amount.
Another type of account to include in the profit and loss column is company revenue and expenses. This income is obtained from transactions related to the company’s income from operational activities, including sales.
The next component that must be filled in is the balance sheet column according to the latest balance. This balance sheet column is filled with nominal accounts consisting of assets, liabilities and equity. The balance that will be entered into this component comes from the adjusted trial balance.
The debit column in the balance sheet is filled with debit accounts, except for those that testify against, such as accumulated depreciation and allowance for losses on receivables. Meanwhile, the credit column is used to fill in the liability and equity account balances of the company.
Example of a column balance sheet
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The following is the PD’s Trial Balance and Adjustment Journal. BMA in December 2019.
Requested :
Based on the trial balance and adjusting journal data above, create a Work Sheet with 8 Columns, 10 Columns and 12 Columns
Solving Worksheet Example Problems with 8 columns
To obtain the nominal in the Profit/Loss and Balance Sheet columns, a merger (decrease or addition) is carried out between the nominal column of the Trial Balance and Adjustment Journal.
Solving Worksheet Example Problems with 10 columns
To get the nominal in the Trial Balance After Adjustment column, you can combine (decrease or increase) between the nominal column of the Trial Balance and Adjusting Journal.
Then to get the nominal in the Profit/Loss Column and Balance Sheet, it can be obtained by transferring the nominal to the Adjusted Trial Balance.
Solving Worksheet Example Problems with 12 columns
To get the nominal in the Trial Balance After Adjustment column, you can combine (decrease or add) between the nominal column of the Trial Balance and Adjusting Journal.
Then to get the nominal in the Profit/Loss Column, Equity Report and Balance Sheet, it can be obtained from transferring the nominal to the Adjusted Trial Balance.
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Book of Recommendations Regarding Examples of Adjusting Journals
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To achieve this goal, by taking into account the development and interrelationships between accounting information and the business practices it represents, this book systematically:
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This book discusses basic accounting which includes the scope of accounting, the basic components of accounting, recording transactions, adjusting accounts and preparing work balances, presenting financial reports, closing books, reverse journalism and correcting journals, as well as trading company accounting. This book is also equipped with examples of accounting cases for service companies and trading companies. Material regarding service companies and trading companies is discussed in a structured manner based on the accounting cycle.
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Article Related to Example of a Worksheet
Conclusion
The work sheet is an important part of recording company transactions, even though it is not included in the financial statements. The main function of preparing a work sheet is to make it easier for companies to prepare the latest financial statements.
The data in the work sheet is based on the latest changes in every transaction and activity within the company. Making a work sheet will make the classification of company accounts and transaction data more concise.
Another use of the work sheet is to minimize the occurrence of errors, both during the preparation of financial statements and inspections. The auditor does not need to be confused to find the latest information about the company’s finances as long as the work sheet has been completed.
The process of filling out the work sheet must be carried out systematically according to the order of the columns. This is intended to avoid errors in calculations that could affect the financial statements. A properly prepared work sheet can be used to analyze business development.
The company can already find out the profit or loss of operations for one period through the work sheet. The amount of profit or loss experienced by the company can be seen through the difference between the balance on the balance sheet and profit and loss.
Making a trial balance can symbolize the level of credibility the company has in managing finances. This of course brings benefits to the company, one of which is that it can attract investors to invest their funds so that the business can grow.