WORKSHEET – is an analytical device used to facilitate the gathering of data for adjustments,

the preparation of financial statements, and closing entries.

FINANCIAL STATEMENTS – are the end product of the accounting process.

STATEMENT OF FINANCIAL POSITION (Balance Sheet) – shows the assets, liabilities, and
equity.

STATEMENT OF PROFIT OR LOSS (Income Statement) – shows the income and expenses.

INCOME STATEMENT COLUMNS

- If total credits exceed total debits, there is profit. The balancing figure is on the debit
side.
- If total debits exceed total credits, there is loss. The balancing figure is on the credit
side.

BALANCE SHEET COLUMNS

- If total debits exceed total credits, there is profit. The balancing figure is on the credit
side and will be added to equity when closing entries are made.
- It total credits exceed total credits, there is loss. The balancing figure is on the debit
side and will be deducted from equity when closing entries are made.

CLOSING ENTRIES – are entries prepared at the end of the accounting period to zero out all
nominal accounts in the ledger. The preparation of closing entries is also referred to as
“closing the books”. This is an application of the time period concept.

All NOMINAL ACCOUNTS are DEBITED

All EXPENSE ACCOUNTS are CREDITED
The resulting balance is recorded in a CLEARING ACCOUNT called the “Income
Summary”
INCOME SUMMARY = OWNER’S CAPITAL
OWNER’S DRAWINGS = OWNER’S CAPITAL
If the Income Summary account has a credit balance, there is profit.
If the Income Summary account has a debit balance, there is a loss.

CLOSED ACCOUNT – an account that has no balance.

OPEN ACCOUNT – an account that has a balance.

POST-CLOSING TRIAL BALANCE – contains only real accounts. The accounts here are the
updated amounts after closing profit or loss and drawings.

REVERSING ENTRIES – are entries usually made on the first day of the next accounting period
to reverse certain adjusting entries in the immediately preceding period.

ACCOUNTS THAT MAY BE REVERSED:

Accruals for income or expense
Prepayments (expense method)
 Pre-collections (income method)

REMINDERS:
 WORKSHEET includes account numbers
 ADJUSTMENTS COLUMN lalagay ‘yung adjusting entries
 Basis kay INCOME STATEMENT at BALANCE SHEET ay si ADJUSTED TRIAL
BALANCE
 Pag same side si account sa UNADJUSTED at ADJUSTMENT ia-add
 Pag different side si account sa UNADJUSTED at ADJUSTMENT imi-minus
tapos ilalagay si amount sa side na may mas mataas na amount.
 Sa INCOME STATEMENT at BALANCE SHEET hindi sila agad nagbabalance,
need mo iminus at add muna si profit or loss.
 CLOSING i-zezero out si nominal accounts (income, expense at drawings)

CLOSING ENTRIES PRO-FORMA

1. Yung buong amount ng income account sa transaction, same amounts si income
account at income summary in this entry.

INCOME ACCOUNT XXX

INCOME SUMMARY XXX

2. Yung amount ni income summary ay yung result ng pag-add ng lahat ng expense

accounts.

INCOME SUMMARY XXX

ALL EXPENSE ACCOUNTS XXX

3. Ilalagay lang dito sa entry na ito yung amount ni owner’s equity at owner’s drawings
mula sa transaction.

OWNER’S EQUITY XXX

OWNER’S DRAWINGS XXX

4. Sa entry na ito imi-minus mo lang yung amount ni income summary na nasa second
entry mula kay income account na nasa first entry. Tapos iyon na yung amount na
ilalagay natin dito.

INCOME SUMMARY XXX

OWNER’S EQUITY XXX
PRO FORMA OF INCOME STATEMENT
Company Name
Income Statement
Date
REVENUE:
Income account XXX
EXPENSES:
Expense account XXX
Expense account XXX
Expense account XXX
PROFIT:

EXPLANATION: Imi-minus mo lang lahat ng expenses kay income account para

makuha amount ni profit.

PRO FORMA OF BALANCE SHEET

Company Name
Balance Sheet
Date
ASSETS
Asset account XXX
Asset account XXX
TOTAL ASSETS: XXX

LIABILITIES
Liabilities account XXX
Labilities account XXX
Libilities account XXX
TOTAL LIABILITIES: XXX

EQUITY
Owner’s Equity XXX
TOTAL EQUITY XXX

TOTAL LIABILITIES & EQUITY XXX

EXPLANATION: Ia-add mo lahat ng asset accounts except sa contra-assets, need mo

siya iminus sa related account niya. Tapos a-add mo lang lahat ng liabilities accounts at
owner’s equity (except kay drawings, imi-minus ito) tapos dapat magbalance si TOTAL
ASSETS at TOTAL LIABILITIES & EQUITY.
PRO FORMA OF CHANGES IN OWNER’S EQUITY
Company Name
Statement of Changes in Owner’s Equity
Date
Owner’s Equity – Beginning XXX
ADD: Profit XXX
TOTAL XXX
LESS: Owner’s Drawings XXX
Owner’s Equity – Ending XXX

EXPLANATION: Dito ia-add mo lang si profit tapos ile-less si owner’s drawings para
makuha yung amount ni owner’s equity – ending.

ADDITIONAL INFORMATION
 Adjusting Entries – take note the covered period
 Unadjusted Trial Balance – assets, liabilities, equity, income, expenses and
drawing accounts
 Adjustments – adjusting entry of additional accounts
 Adjusted Trial Balance – unadjusted trial balance minus adjustments
 Income Statement – adjusted income and expense accounts
 Balance Sheet – adjusted assets, liabilities and owner’s equity accounts
 Closing Entries – income and expenses turned into income summary, owner’s
equity – owner’s drawings, income summary – owner’s equity
 Post-Closing Trial Balance – adjusted balance sheet plus closing entries