Textbook Notes (280,000)
CA (160,000)
UTSC (20,000)
MGA (400)
MGAB01H3 (100)
Chapter

Work Sheet


Department
Financial Accounting
Course Code
MGAB01H3
Professor
Liang Chen

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Work Sheet
¾ A work sheet is a multiple-column form that may be used in the adjustment process
and in preparing financial statements.
¾ As its name suggests, the work sheet is a working tool for the accountant. A work
sheet is not a permanent accounting record; it is neither a journal nor a part of the
general ledger.
¾ Financial statements, for example, can be easily prepared from the work sheet,
reducing errors.
Closing the Books
¾ At the end of the accounting period, temporary accounts are closed and made ready
for the next accounting period.
¾ Temporary accounts relate to a single accounting period. They include all income
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¾ In contrast, permanent accounts consist of all balance sheet accounts, including the
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Preparing Closing Entries
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¾ Temporary account balances are transferred to the equity account of the RZQHU¶V
capital.
¾ Closing entries formally record in the ledger the transfer of net income (or net loss)
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¾ Closing entries produce a zero balance in each temporary account. These accounts are
then ready to accumulate data in the next accounting period separately from the data
of earlier periods.
Posting Closing Entries
¾ Closing entries, ensuring temporary accounts ending with a zero balance, are posted
to the general ledger.
Preparing a Post-Closing Trial Balance
¾ After closing entries have been journalized and posted, a post-closing trial balance is
prepared.
¾ The purpose of this trial balance is to prove the equality of the permanent account
balances that are carried forward into the next accounting period.
¾ Only permanent (balance sheet) accounts should be on the post-closing trial balance.
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