Accounting Business Reporting for Decision Making

130 Accounting: Business Reporting for Decision Making

4.5 The accounting worksheet

LEARNING OBJECTIVE 4.5 Prepare an accounting worksheet and a simplified statement of profit or loss
and balance sheet.

The accounting worksheet summarises the duality associated with each of the business

transactions. All the business transactions of the entity can be entered into the worksheet. This is

especially useful when there are a large number of transactions to be analysed. If we kept analysing

each transaction using just the accounting equation, it would be quite cumbersome to summarise the

impact of all the transactions over a certain period. This could lead to errors that would ultimately

affect the financial statements. Once the transactions have been entered into the worksheet, we can

total the individual columns of the worksheet and use them as the basis for preparing the financial

statements.

The following transactions occurred for ATC during the month of September 2016. The first step

in preparing the worksheet is to understand the effect of each business transaction on the accounting

worksheet.

Date Transaction Effect on accounting equation

2016

September 1 Nicholas contributed $20 000 cash into

the business bank account.

Increase cash by $20 000 and increase equity by

$20 000.

3 The business purchased an iPad for

$500 cash from JB Teck Supplies.

Increase office equipment by $500 and decrease

cash by $500. Note: We do not record individual

asset items. Instead, we record them as a category

of assets (in this case, office equipment).

4 The business sent an invoice to Tennis

Queensland for services rendered $3000.

Increase accounts receivable (i.e. debtors)

by $3000 and increase income by $3000. We

record the income in a new column called profit or

loss, and the income will be shown as an increase

in profit. The profit or loss column will summarise

all income and expense transactions. The balance

in the profit or loss column is transferred to equity

at the end of the reporting period.

5 The business banked cash received from

coaching services of $10 000.

Increase cash by $10 000 and increase profit or

loss to record income of $10 000 for coaching

fees.

7 The business paid rent of $1000. Decrease cash by $1000 and decrease profit or

loss by $1000 to record rent expense.

8 The business negotiated with a

contractor (Allan Faff) to perform

80 hours of work over the next two

weeks for Indooroopilly Tennis Club.

This event is not a business transaction, as there

is no exchange of resources between the business

and another entity or individual.

9 The business banked cheques received

from DT Tennis for coaching services

provided of $5000.

Increase cash by $5000 and increase profit or loss

by $5000 to record income for coaching fees.

10 The business paid salaries to part-time

staff (A Rafter and L Pratt) of $2200.

Decrease cash by $2200 and decrease profit or

loss by $2200 to record the salaries expense.

12 The business paid $1800 to Dickson

Bros for office furniture.

Decrease cash by $1800 and recognise an asset

(office furniture) of $1800.