During the normal course of business, record keeping and bookkeeping tends to be increasingly important in order to ensure that businesses have proper clarity and understanding regarding their financials. It is also considered pivotal because of the fact that it marginally improves the management within the company on grounds of enabling users of financial information to make decisions based on authentic historical information regarding the transactions that took place over the course of time in the company.
Therefore, numerous different tools are utilized by accountants in order to facilitate an improved record keeping system. Accounting worksheet is considered one such tool that helps companies to keep a proper record of the financial activities over the respective period of time, so that it can act as an aid for reconciliation, and relevant positing at year ends.
An accounting worksheet can simply be defined as a tool that helps bookkeepers and accountants to complete the accounting cycle, and prepare year-end reports in a manner similar to unadjusted trial balances, adjusting journal entries, as well as year-end financial statements.
An accounting worksheet is therefore, a simple representation in the form of a spreadsheet that helps to track each step across the accounting cycle. It normally constitutes of 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 simply 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, title of the report itself, as well as 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, and 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, so that they are able to adjust the format as per their own need.
Advantages of Creating an Accounting Worksheet
The main advantage of creating accounting worksheet mainly lie on the realms of effective management or resources, which can help companies to keep a 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. This is because they have all the balances listed in a single worksheet that helps them to easily prepare the final year statements with relative ease. In the same manner, it also ensures the bookkeeper of the company to ensure that all the adjustments have subsequently been carried out by the company.
In the same manner, creating and preparing an accounting worksheet also helps to have a generic idea about the financial health of the company (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 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 to be an extremely phenomenal and resourceful tool for organizations who want to ensure that book keeping and subsequent preparation takes place with authenticity and there are no items left out.
Regardless of the fact that it is not entirely biding to create an accounting worksheet, yet it considered as a good practice to prepare it for purposes of internal efficiency. However, this does not mean that accounting worksheet can solely be used for preparation of the financial statements. In fact, it is considered to be a subsiding aid to the process, with the help of which accountants can reconfirm account balances at the end of 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 out upon.