During the normal course of business, record keeping and bookkeeping tend to be increasingly important to ensure that businesses have proper clarity and understanding regarding their financials positional and performance. It is also considered pivotal because it marginally improves the management within the company to enable users of financial information to make decisions based on authentic historical information regarding the transactions that took place over time in the company.
Therefore, numerous different tools are utilized by accountants to facilitate them to improve the record-keeping systems. An accounting worksheet is considered one such tool that helps companies keep a proper record of the financial transaction over a period of time. The worksheet is normally included unadjusted trial balance, adjusting entries, adjusted trial balance, income statement, balance sheet, and statement of change in equity
An accounting worksheet can be defined as a tool that helps bookkeepers and accountants complete the accounting cycle and prepare year-end financial reports like unadjusted trial balances, adjusting journal entries, and year-end financial statements.
Therefore, an accounting worksheet is a simple representation in the form of a spreadsheet that helps track each step across the accounting cycle. It normally constitutes five sets of columns, which begin with the unadjusted trial balance accounts and end with the subsequent year-end financial statements. These columns majorly include Trial Balance, Adjusting Entries, Adjusted Trial Balance, Income Statement and Balance Sheet. Alternatively, accounting worksheets can be defined as a spreadsheet that shows all the major transactions and steps in the accounting cycle in a parallel fashion.
Therefore, with each step that is represented on the accounting worksheet, it can be seen that each step properly lists down debits and credits, and totals are subsequently calculated at the bottom. Similar to trial balance, the accounting worksheet is also supposed to be headed with the company name, the title of the report itself, and the time period during which these transactions have occurred within the company.
However, it must also be noted that accounting worksheets are mainly created for internal purposes within the organization. Therefore, this working paper is never publicly made available for any of the external parties. The fact that this is an internal document gives flexibility to the companies to prepare it according to their own requirements to adjust the format as per their own need.
Advantages of Creating an Accounting Worksheet
The main advantage of creating an accounting worksheet mainly lies in the realms of effective management of resources, which can help companies to keep track of their records and transactions for proper reconciliation.
Firstly, it can be seen that the accounting worksheet helps accountants to complete the process of preparation of financial statements in a much easier manner. They have all the balances listed in a single worksheet that helps them prepare the final year statements with relative ease easily. In the same manner, it also ensures that the company’s bookkeeper ensures that the company has subsequently carried out all the adjustments.
In the same manner, creating and preparing an accounting worksheet also helps to have a general idea about the company’s financial health (by looking at the year-end balances) before the actual financial statement of the company is prepared and subsequently published by the company.
A suggested model for the preparation of the accounting worksheet is given below:
To summarize the definition and the usage of the accounting worksheet, it can be seen that it is best described as an accounting spreadsheet that summarizes the year-end balances of almost all the accounts at the end of the given year. Hence, it is considered an extremely phenomenal and resourceful tool for organizations who want to ensure that bookkeeping and subsequent preparation occur with authenticity and there are no items left out.
Even though it is not entirely biding to create an accounting worksheet, yet is considered good practice to prepare it for purposes of internal efficiency. However, this does not mean that an accounting worksheet can solely be used to prepare financial statements.
In fact, it is considered a subsiding aid to the process, with the help of which accountants can reconfirm account balances at the end of the subsequent year. However, it still requires the accountants to reconcile balances at the end of every subsequent year to ensure that transactions and account balances have not been missed.