Multiple column sheets wherein all necessary information used for the preparation of the financial statement is recorded in a systematic process is called a worksheet.
The worksheet is a multi-column sheet or a computer spreadsheet where accountant writes, in brief, information necessary for preparation of adjusting entries and financial statements.
In bigger organizations where the volume of accounts and adjustments are much more, the possibility of error remains at the time of adjustment of adjusting entries with ledger accounts if the worksheet is not prepared.
Preparation of financial statements correctly becomes complicated and sometimes is delayed. In the present day world, it has become the practice of preparing worksheet in the big organizations before preparation of financial statements.
Accountants make adjustments of adjusting entries with other relevant ledger accounts before preparation of financial statements.
Before preparation of financial statements, the accountants want to be sure of the arithmetical accuracy of accounts by making adjustments of adjusting entries with ledger accounts through the worksheet and then go for the preparation of financial statements.
The worksheet is prepared at the end of accounting period before preparation of financial statements.
3 Types of Worksheet are
- General worksheet,
- Detailed worksheet,
- Audit worksheet.
They are explained below,
- The general worksheet contains four to six pair columns. Generally, five pair columns or ten columns worksheet can serve the purpose of general business. These five pair columns are;
- Trial balance,
- Adjusted trial balance,
- Income statement, and
- Balance sheet.
- The detailed worksheet is prepared for containing more detailed information over general worksheet. Sometimes extra sheet containing columns are enclosed for explaining particular items. The matters for which item-wise lists are to be prepared are:
- Accounts receivable and accounts payable lists,
- Production expenditure lists,
- Insurance premium lists etc.
- Audit worksheet is used for preparing financial statements and lists for various uses of business concerns.Audit worksheet is prepared in the light of auditing of various items included in the worksheet. It is an aid to audit work of a business concern.
The worksheet is a technique of accounting through which the accounting information is integrated for adjustment and classification.
The main objective of the worksheet is to verify the accuracy of accounting information before preparation of financial statements.