Chapter 12, Problem 1.1SRQ

Why is a 10-column worksheet used as part of the procedures for adjusting and closing accounts and preparing financial statements?

To determine

Describe the reason for using a 10 –column worksheet for adjusting and closing the accounts and for preparing the financial statements.

Explanation of Solution

Worksheet: A worksheet is a common tool used while preparing the financial statements. It is pre-defined form, with multiple columns, to be used in the adjustment process.

The purpose of worksheet:

The worksheet is an auxiliary device that helps in the preparation of the adjusting entries and the financial statements.  The worksheet is a common tool used by the accountant for assistance, but it is never a permanent accounting record.  The worksheet helps to reduce any mathematical errors. In the worksheet, all the data required for the preparation of the income statement, statement of owner's equity, balance sheet and statement of cash flows is available in the same place.