Discuss a worksheet by answering the following questions: a. Why is the preparation of a worksheet not required? b. When a worksheet is used, does a trial balance have to be prepared? Why or why not? c. If the Income Statement and Balance Sheet columns balance, is this proof that the financial statements are correct? Why or why not?
a. A worksheet is not required because it is not a financial statement, nor is it made public. Therefore, some accountants will use a worksheet to simplify the process of preparing adjusting and closing entries, and preparing financial statements, while other accountants may opt not to use a worksheet.
b. No. When a worksheet is used, the trial balance columns of a worksheet take the place of a separate trial balance.
c. No. Equal totals in the two pairs of columns are not absolute proof of accuracy. If an asset has been carried to the Income Statement debit column (or an expense has been carried to the Balance Sheet debit column) or a similar error with revenues or liabilities has been made, the work sheet will balance, but the net income figure will be wrong.
You might also like to view...
The objective of an assignment problem solution most often is to minimize the total costs or time of performing the assigned tasks
Indicate whether the statement is true or false
Which of the following is an example of an intangible cost of turnover?
A) interviewing costs B) recruiting costs C) coaching costs D) testing costs