FUNDAMENTAL CONCEPTS AND PRINCIPLES

I. Objectives:

 To know the purpose of the worksheet

 Be familiar with the preparation of the worksheet
 To understand the objectives of post closing entries and reversing
entries
 Prepare the closing entries and post closing trial balance
 Prepare the reversing entries when necessary

II. Subject – Matter:

The Worksheet
Completing the Accounting Cycle

Ref: Basic Accounting by Lao Ong page pp 21-30

Ref: Basic Accounting by Lao Ong page pp 99-102

III. Teaching – Learning Strategies:

ENGAGE:
 Discuss the topic thoroughly.
 Ensure that the students are able to follow the phasing of the
discussion.

EVALUATE:

Evaluation will be done through a short quiz

ASSIGN:

Prepare a worksheet.
Introduction
What is a worksheet?

Important points

* Summary device

* Gathers useful information needed for the preparation of the financial statements,
adjusting entries, closing entries, and the post-closing trial balance.

Components of a worksheet
 Trial Balance
 Adjustments
 Adjusted Trial Balance
 Income Statement
 Balance Sheet

Evaluation

A worksheet is a mandatory form that must be prepared along with an income statement and
balance sheet. False
The adjusted trial balance columns of a worksheet are obtained by subtracting the adjustment
columns from the trial balance columns. True
Preparing a worksheet involves
 Two steps
 Three steps
 Four steps
 Five steps
The information for preparing a trial balance on a worksheet is obtained from
 Financial statements
 General ledger accounts
 General journal entries
 Business documents
A worksheet is a multiple column form that facilitates the
 Identification of events
 Measurement process
 Preparation of fs
 Analysis process

CLOSING ENTRIES

The closing entries update the owner's capital account at the end of the reporting period.
They also eliminate the balances of the nominal accounts to ready them for the next accounting
period.
To close a temporary account, an entry is made to make its balance become zero. Closing
transfers the balance of the temporary accounts to the capital account. The Income Summary,
considered to be a summary account is used to closed the expense and income account.

STEPS IN CLOSING THE ACCOUNTS

1. Close the income accounts

2. Close the expense accounts
3. Close to the income summary account
4. Close the drawing account

PREPARATION OF THE POST CLOSING TRIAL BALANCE

The post-closing trial balance is prepared from the general ledger accounts after the
closing entries have been posted. This is necessary to ensure that these entries have been
correctly posted. This will also test the equality of the accounts.
REVERSING ENTRIES

Reversing entries are made to simplify the accounting process. They are made on the first
day of the next accounting period. Reversing entries are optional and are not used in
connection with all adjusting entries.

Following are the adjusting entries that can be reversed :

a. Prepayments (expense method)
b. Unearned Revenue (income method)
c. Accrued expenses
d. Accrued income

The reversing entry is simply a journal entry that is just the opposite of the adjusting
entries made at the end of the preceding accounting period.