Financial statements show how companies performed during a given accounting period such as a month, a quarter or one year. Accounting worksheets help businesses prepare those financial statements. Though they are not required, worksheets allow companies to see account balances and how adjusting entries would affect their ledgers before they prepare their financial statements. Businesses usually do not share their informal accounting worksheets with investors or other external audiences.
TL;DR (Too Long; Didn't Read)
An accounting worksheet gives you a basic for checking your calculations so you can see what the company's finished statements could look like and whether anything looks "off" before the end of the accounting period.
Accounting worksheets show managers how a company’s finished financial statements could look. Worksheets also could be used for preparing interim financial statements. Managers can use such information to make decisions, like whether to purchase equipment or hire staff based on how the company is performing.
Accounting worksheets are typically 10-column spreadsheets with credits and debits for trial balances, adjustments, adjusted trial balances, income statements and balance sheets. Accountants can confirm if accounting entries are derived correctly by checking formulas and calculations within the spreadsheet before preparing a company’s formal financial statements.
Preparing Unadjusted Trial Balances
Listing the current balances for all of a company’s accounts provides accountants a starting point for preparing financial statements. Accountants can review balances for accuracy before making further calculations. This gives the accountant a heads up as to whether anything looks off before they start performing the calculations.
Entering Adjusted Trial Entries
Accountants can write out any information that they would need to adjust balances before actually doing so. They can provide a thorough assessment of a company’s financial activity by explaining each adjustment for an account. Adjustments may be made for accruals, depreciation or inventory adjustments, for example.
Entering Adjusted Balances
Accounting worksheets show how adjusted entries would affect the relevant accounts. Debits and credits should equal out, providing an accurately adjusted trial balance that would allow the adjusting entries to be put into the company’s general ledger. If the books are not balanced, accountants can review entries for mistakes or omissions, and make any necessary corrections.
Entering Relevant Adjusted Balances to Income Statements
After an accountant has confirmed that adjusted trial balances are correct, they can transfer all revenue and expense account balances to the income statement columns on an accounting worksheet. They can then use this income statement as the basis for their formal financial statements.
Entering Relevant Adjusted Balances to Balance Sheets
If the company has earned a profit, credits will outweigh debits and the resulting net income would be added to the balance sheet. If debits exceed credits, a net loss is posted to the company’s balance sheet. All other account balances not included in the accounting worksheet’s income statement columns also are transferred to the balance sheet columns. These include account balances like assets, liabilities and owner’s capital and drawing. Accountants can then prepare the statement of owner’s equity, prepare the company’s financial statements and journalize and post adjusting entries.