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Project 1

1. Project 1

1.15. Training Room Summary

Project 1: The Worksheet

Project 1: The Worksheet

 

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Training Room Summary

 

This ends Project 1: The Worksheet. Answer the following questions to check your understanding.

  1. Where do the numbers come from for the trial balance section of the worksheet, and what is the purpose of this section?

 

Check your answer.
  1. The numbers are from the ledger, and the purpose of the trial balance section is to ensure that total debits equal total credits in the ledger.

 

  1. Why does the trial balance section of the worksheet have to be completed before the rest of the worksheet?

 

Check your answer.
  1. The trial balance section must be completed first to ensure that the ledger amounts are correct before extending these numbers when determining if a net income or a net loss has occurred.

 

  1. What kind of accounts are extended to the income statement section of the worksheet?


 

Check your answer.
  1. Only revenue and expenses are extended to the income statement section.

 

  1. What kind of accounts are extended to the balance sheet section of the worksheet?


 

Check your answer.
  1. The following accounts are extended to the balance sheet section:
    • assets
    • liabilities
    • owner’s equity (capital and drawing)

 

  1. How do you know if a company has a net income or a net loss?


 

Check your answer.
  1. If total revenue is greater than expenses, the company has a net income.

    If total expenses are greater than revenue, the company has a net loss.

 

  1. If a company has a net income, where will the amount be entered in the income statement and the balance sheet? Will it be in the debit or credit column?

 

Check your answer.
  1. If a company has a net income, the amount will be added to the debit column of the income statement and to the credit column of the balance sheet.

 

  1. If a company has a net loss, where will this amount be entered in the income statement and the balance sheet? Will it be in the debit or credit column?

 

Check your answer.
  1. If a company has a net loss, the amount will be entered in the debit column of the balance sheet and in the credit column of the income statement.

 

The information obtained when working with the worksheet forms the foundation for the financial statements prepared by an accountant. You are now ready to use this information to complete financial statements in Project 2.