How Does a Worksheet Help the Closing Process in Accounting?
A worksheet is an accounting tool used at the end of an accounting period to assist in a company's adjusting and closing entries. Closing entries are performed on all nominal, or temporary, accounts in a company's accounting books.
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Purpose
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A worksheet is a 10-column ledger starting with a company's trial balance of all accounts. Adjusting entries are made and recorded on the worksheet and a post-closing trial balance is calculated. From this balance, a company performs closing entries.
Details
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Closing entries are entries made at the end of an accounting year. All nominal accounts are closed because they are simply accounts used to track amounts for a one-year period. The worksheet provides a list of all accounts and current balances directly prior to the closing process.
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Features
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Closing entries take place on only revenue and expense accounts, which are the accounts used in preparing an income statement. The worksheet's final step is dividing the post-closing trial balance accounts and amounts into two categories: those used for the balance sheet and those used for the income statement. All accounts in the income statement columns of the worksheet are the accounts that are closed.
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