How to Prepare an Accounting Worksheet

by Kathy Adams McIntosh; Updated September 26, 2017
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Accountants often use worksheets as a preliminary step to preparing the financial statements and consolidating a great deal of information. The worksheet is a tool for creating a trial balance and an adjusted trial balance. It uses all of the accounts contained in the company’s accounting records, records adjusting entries and calculates the final numbers to enter on the financial statements. Creating a worksheet is an optional step and is most often used in manual accounting systems. A worksheet may be used as an analysis tool in a computerized or manual accounting system.

Items you will need

  • Chart of accounts
  • Current account balances
  • Adjusting journal entry information
  • 10-column paper

Preparing the Worksheet

Step 1

Format the worksheet. Starting at the first line near the top right of the page, list each of the accounts from the company’s complete chart of accounts. The next column is considered the first column of the worksheet. Label the first and second columns "Trial Balance." Label the third and fourth columns "Adjustments." Label the fifth and sixth columns "Adjusted Trial Balance." Label the seventh and eighth columns "Income Statement." Label the ninth and 10th columns "Balance Sheet."

Step 2

Prepare the Trial Balance columns. Write the current balance of each account under the columns labeled Trial Balance. If the account has a debit balance, write the balance in the left column. If the account has a credit balance, write the balance in the right column. Add the total of debits and credits at the bottom. They should be equal. Add the total of debits and credits at the bottom. They also should be equal.

Step 3

Prepare the Adjustments columns. Write the adjusting entry transaction amounts under the columns labeled Adjustments. If the transaction amount was a debit, then write the amount in the left column. If the transaction amount was a credit, then write the amount in the right column. Add the total of debits and credits at the bottom. Again, they should be equal.

Step 4

Prepare the Adjusted Trial Balance columns. Write the adjusted balance under the columns labeled Adjusted Trial Balance. The adjusted balance is calculated by taking the amount from the Trial Balance column and adding the adjustment from the Adjustments columns. A debit balance is increased by a debit adjustment. A debit balance is decreased by a credit adjustment. If a debit balance is decreased to less than zero, it becomes a credit. The same philosophy applies to credit balances. If the adjusted balance is a debit balance, write the balance in the left column. If the adjusted balance is a credit balance, write the balance in the right column. Add the total of debits and credits at the bottom. The totals should be equal.

Step 5

Prepare the Income Statement columns. Revenue and expense accounts are the Income Statement accounts. The balances from these accounts should be carried over from the Adjusted Trial Balance columns. If it was a debit balance, it should remain a debit balance. Add the total of debits and credits at the bottom. The columns will not be equal. This difference is the net income, and it should be added to the column at the bottom to make the two columns equal.

Step 6

Prepare the Balance Sheet columns. Assets, liabilities and equity accounts are the Balance Sheet accounts. The balances from these accounts should be carried over from the Adjusted Trial Balance columns. If it was a debit balance, it should remain a debit balance. Add the total of debits and credits at the bottom. The columns will not be equal. This difference matches the difference from the Income Statement columns and is the net income. It should be added to the column at the bottom to make the two columns equal.

Tips

  • A spreadsheet computer software program may be used instead of the 10-column paper. Using a spreadsheet may reduce the potential for errors.

Warnings

  • It is important that the columns balance at each step. If they do not, the difference will carry through to the rest of the worksheet.

Photo Credits

  • Calculating payments image by Christopher Meder from Fotolia.com