An accounting worksheet is a tool that businesses use to balance and close out their books at the end of a period. An accounting worksheet lists all the balances of each account a business has, with adjusting and closing entries made to these balances. When a worksheet is complete, the company prepares financial statements from them.
Chart of Accounts
Every company keeps a chart of accounts that lists every account the company has. It is divided into five sections: assets, liabilities, equity, revenue and expenses. Each of these accounts is in the company’s general ledger, where balances of each account are maintained. An accounting worksheet begins by listing each account and the balance each account has.
One main purpose of an accounting worksheet is to record adjusting entries. Adjusting entries are made at the end of each period. They are not normal everyday-type entries; they only take place at the end of a month or period. Examples of adjusting entries are those adjusting for supplies used, insurance used, revenue earned and interest earned. These entries are recorded on the worksheet.
After adjusting entries are made, each account is updated on the worksheet. If an account had an adjusting entry, the previous amount in that account needs to be adjusted. If no adjusting entry is made to an account, the same balance transfers over to this column. The worksheet helps to keep the company’s ledger in balance.
The worksheet is a 10-column ledger and is also used to calculate and record closing entries. Books are always closed at the end of every fiscal year, and the worksheet aids the closing process.
One of the primary uses for a worksheet is for the information it contains. After making adjusting entries and finalizing closing entries, the business can generate financial statements. The worksheet contains all the information needed to prepare these statements. After preparing the financial statements , the company begins a new worksheet for the following year.