chapter aight The Work Sheet and Financial Statements| 8.4 | The Six-Column Work Sheet Purpose of the Work Sheet ‘When oe eye nal stew Cate 7.01 ola Ser data om ‘el alice. Accoutans ter usng nines forty saeas weg “ofregingan ara balance aon ie wor bet cor secon per ema tel ots changes ee mae cs Is one sl retshes au gon che een werkt bein they ean be aga a ty eatin eee {ist ke the ark sheet Account ry se ago Wonk set nor to che at ‘onal infomation The clght coins allo arouse wae met opin by cetsin GAAPS and o comenicl egal estou Fuca teresa yearend racehies. You nls thei sect i Captor However now we il nea sioltan wen shay ese iw cone as ip pie. ‘Control Accounts for Accounts Receivable and Accounts Payable When got took a yu st work sheet on ige 258 yo ea een te vay accu cele an acceso hail. tee sr no dues res associate Wa the conn eeshle secant {01 res associated with the Accounts Pale accom, Wiad yor nee \workalet ae control wecount th Accounts Recah a the Aceousts Payable conta! aceouue Having two cot accounts sat uf dozer FIs of ad bors aa redo accounts steams the wk she singe m secouiseiable anda sgl ie for acoums yaya ate tie ie tien for pezring work sets and povies mane ete reer ne the balnce see ‘The deta aot the acon ul debe wt cons separate recon. The foul ocd fr a separate renrts for debtor a rors sone ee in ng rontol account at he the tepies af CapeTS ww fe ‘Steps in Preparing a Work Sheet Step 1 ie i te heating om the work toe pes Esanine the eae Faguie 1below carey. Obeerve the precse wa ha he ec pote indescaet. Won See “or red econ 31,35] Fecorsrgie an scsaer [eres [ener headeg or he a ce ec wereshew | TTC Step 2 Entrallacounts wth thee balaeesin he Ost columns 2 shown Figure 82 below Ii exwenial hat the al ane coms be corer ‘ore you connie. Mere ope of rodicg actuate wath et heal balance das na ane rigune 8.2 Wok ies eae Decode 1.36] | tucraigte Twenge Shoat | Ba Rent Euerse | Telesnone Expense ‘als ace 6ttt CEH th Cit rtSeon i [ass (Gelert nck sex shown nage 84 bo: Tae foe ser alaing the work set 8 Ta each ofthe four righ hand ney cos ad wate in he ot Cae tence ence theo aca Ste cols oe ‘Xan, $357001 thn ee eres betcen theo Bac Sheet “oka (again, $3 37201) anf seta het flere ae ea Wie dterecesare equa ths ro called he blac ae teva na the sane, the worse oes ot ala eh ‘atl inpossbie forthe works to be cme if does nce Therefore, ym shou nok pret tthe preperation a the na nents ni ll errs ave le Kate ancestor eco he balancing gre othe work sh i ho places, ou inFigue Stow: Roemrshernemncane gener tent cars inotaingMipe represents a nome Record he tb i ‘we onthe ort Sle of the come state colts oe ce Side ofthe tale shee ots The acing ge spy the ret io he balance she! set, bean tee ncn ee ‘Steam inte the copia func se aa wast | Reesaven J aeonasar women aaa fotimore i ir santo [Accs Sst Renate | GStRacomaie | newts” Paria hte” ean trmson ee cabl SEMAN [Teteteiorwg (acerng Bape Bn Chas apr Garces [Tieton ae [ae epee ("Ne cone| i { Chapters soune 8.5 oncay he wok thee oe porta 6 [Wet ine otc th the sheng ae ($5 7201 lace n no locations ‘he work tet the cater 0 oe och Ths ae vc hee prof 4. Rue sbow hel cola al shown Figen page: ‘Net income or Net Loss Toe ting igure onthe worse aes el acon ot i soe tale ure ae he OORT Re shinmnismve sb Asari fonearssvir on ates ‘The Work Sheet and the Financial Statements ‘Seve and bases ewes rly lok tte ra dal fate ance sooth Theyre on te scot parent onan sooo noe a ‘o0Voc te dalton meen undersea fem, The onsen eae at eee fish accor vepors safc stteets I sap eg Accouningdeparnent toe cls reports ad ste ‘Ncompeed wot shee corte a hr onaion seo ups ‘nomen ine banceePaeso eae eee 258 shor low the icone sate ae ance set ats Rea ‘roar dct fom te work te>——————<—_—_—_— i Srp od econ Po es Pee Br eee Ca iri rg pee ‘i ere Maelo SESE Uae ee——_—_— secconat [ase More on the Accounting Cycle You hve sendy ee ts rss a roe ae ob one ng ‘fiscal pero Jouning, posting, at atncing uf th ele ar cao unr enpovees The next tho steps ince the preprint rk cee ed "he acl tests. These step ve cri ot by See people A oe stes together consti the ecouting eel ate The ssp of he aecoutrg eee tte fate show in Fgh 3.9 bow: roune 8.9. Sout deiner onde scouring eye a _ omy | Seen foes —t oh Pstgetorene << 4 seg vote ey) Peto oy_Review Questions {he securing dearer. ho aly pees Gaal sateen? Nae an dese the fom se by accom fe he cn 5 Wot int a accuse exenedo eases ean? 4 What deste Accounts fevcabic en acrooa eae ae What oration since rk hess 9. How do yom kiwi the work shes Bee 10. Why it imporan to talace the nask eae 1. ove the Drawings cco nt exe ote Icon Staten seo? 13. Wy domaiagnsandonners wall ha heal oponreconte 14, What econ ote managers and oer eo 16, vee ts ates eae nthe acting ye or Exercises 4+ Por cach accoua s blo. inate wheter it would Ye eae tothe Income Statement Debit, Inconte Slaten Cie, Balas Sa a Hatce Sct Cre clam. (Ada for ths exes © somite ee orsook) Sha Osseven e226 fs my We 8 vay Of presentation and thot tots hen preparing Enoncal stents Yo wl eplone sone of tee loa the net tho sears Comparing Income Statements ‘When comaring ince sien for to consecutive yor, econ oon ee er en? Corton ORO 000 “These fics, stating sone. a (hich rome cone ae nl ots Infrae a he ee hat ftw; Deranged eee remem $9150 90 Spe Hse oo * 4 “The inforation athe st ols can baie wef hen anagem ‘nahn sttinent ste erty by ones and nage Fo etn let oer ornare Wl lok for reson fo erase a fet. the sales force ditig fuer ae abating more ores? If 8 [Acoounts Reale or Sales Reve (obo shoul so sho news at {Cihere fo neeas a Arcounts Rectal of Seles Reve. oul he that ‘ome cae have become uneconomical nd son be sold Ths the pteentage [lst sugenta a area for the over ormanagr oesTrend Analysis soe hse Sgn ooking ham, Ba whe se ges ‘sve imo pereesags orion papltey canbe tie eae ane Percentages Caving the bow dat weg. belo kes te arto inert an doesn Fehglttese peta eit by pat the sks ie fr he ye one Maazel ear Lat mating 1 For exangts he pone ‘we fr Year eel atone ee es vente Grapis Aigner an btn tte especie ot dt i presen by wean of ‘arc graph bar graph ofthe Segue son teeee secon [24s Sips that, without ging ny Ages, the ose ofthis conpay ened hae “Sales hae Aub in fv ears” Wht dor the ee asso Fo te the jeri ovaloking? Clears, there Was a dewien a ese 4 ao whieh sa Would ent venation ‘Commonsize Income Statements A het sees 0 compare the acon states of dierent comus es. conparns re ote) Tomsk hy st khing esol ies sone, eeeal ithe companies fer pes we Conshe the icone streents blow fr fo companies fd ane ie of Income Sirens ‘YEAR ENDED DECEMGER 1, 20- Company — Comp 8 ‘se siso — sasnon0 ‘Aone Expt $2550 Fan seme 240 ge: pense oom One Eger 509 Teal gas si Nectcome $3400 ‘The: no companies canbe mie fo lk he sme sz. This i bey conn Inge dole amon toa peeeage tsi the aes igi hee. Tew {cone damon shove, wth te column of pret ie! pen dow They ae now Ina alle conn se on ‘COMMON SIZE INCOME STATEMENTS conyers comers Ena Se s1sooe 100% 450000 1005 se atone ese 52550 Re FS0m ae ere oe thom ae fem Bore 240m tee emo Wier Epes Gomme at Ober pee > ool penis aeS Section 82 WW suena: sear gach culation. comer operat Pu te dar seni kn Sen fl mou eke nd by 100 Forcranple tinea Aslomerve Exc or Company aa Semone fom cate ea wae Fr eas cane SQUIRT Comma as mere than tke smc Come Sa on sales. Simla, Compary 1 spends one Company A Review Questions I mle scounanis ie vat of presetiton dmesg 2 Fav ow o make te aan fx Poon ess see >. For ated abi ofthe ers, Whi gn Wold soe fs oy Vea eae? or Year 4 She comparing to deo compare, wha conton sakes a common ine saesien expecially et? 5 het Rees the dsr when preparing a conta incom sitet? Exercises 1 SOUR ae 22 Sim ncomewatenent Proteome aa Sein for 204 ont 202: Stay ths cee eat anders ‘Complete the Dot Iernse or Deeetse count in sous Werktook Samplte the Percentage Increase or Decrease colunn Ia you, Workbook, © atthe for expen acts that hw the rete daar cue Tor the yearn, D. The ones Caywood ue conceied sb the dante deren Sry Mcome fr 204 10 202 Prepare a biet report to Me ties i the factors causing this decreas— oe he "wo fos he ‘A Complete the common-size Income statements in your Workbook 3. entity areas of weakness in the operations of Mp Top Cl . nom oplion, can Ace Cleaning tn Tip Tp lent een Shout {hey procced wih the paces? Bley give your gearous, How Accountants Use Balance Sheets Balance Sheet—Account Form and Report Form The sane metho et sy nee als to the tec set. The mothe lace abet ht Sn ego ers 1s per iereat fom the one yu sate are Fhe weve baer sets nee shown account form The account for ofthe nlacesteet none ‘on ich tho ination presen a aside ae or hota Pane In is hae. il ne ase atte sve en th ear fe ‘Te report form af the Balance shet is or on whch ih intra pe seated ac above oF vera forma, The a syon sone Fiawe 1 elon, The report fort ofthe balance she conan sane a aise pape CClassifed Balance Sheet cont preter to gaze bate het ds 2 forms fer oas a as ‘lied balace see. laid alate sheet the data roped orc "anor ctegoris, Tes option ne ease To aa the erste oe thc ance shee. spe casted tance se shown in gute 12 omy 270. Dbeve the overall appearance a the alee sett gue 2 cnet Explanations fr the ctciadnambery appear belo the sample tan set ant ‘Sontine on gr 21 tn pacar, not the caning of he ect ane setae Hibs an Tonge ties” (a—— “= Jo thescotrep ety a = ons cong “es a 579 @q7 Senate SEB sem ar so =. ee OTT Neonties ke Qa. crete | | ee en oe eo Te re ‘Mortgage saan (ures) 80 sheonr aa OL een a a oO ol "ES 28 \ aioe ae Ieeseser sens) “ee 6? eames \ sed ——— Once ita oh tebe (© currentassets: sets that wit be converte it cash (or wep dg the © Fixed asets Cor plant aed eqpment) tong er ase: el (thei we messin producing deo vies Derren abies she des, pyre of wich seme ec ‘itn eter teetatase secon [art tore he de othe ae th whine se } Oger is organized to show clearly the beginning balance, the incsease oF: Seco tacts etna ata ge @ tev acing oases tlie as oer ey ‘The lassie alae set proves seid ot for emparsn, For espn Fyure 815, the cure acts of the Peoe's Secu Company ate S18 the ‘amen ais are 546052 Tes totals matchup melee tine ie Fr ‘oth sane year oleae (The crease aout nly represents he ass ‘hal be ted into cat than one yar The cent baie sou showy ‘he ds ae wit ae eae) ‘The tos or eaet ants ae crontab for Pepe's Sent Compas ital 2027, ts 838 07 ~ 896052 Coa he mow ark tere [the teste offa business is I People’s Secu Company hal wen capa of ‘Sond into 2927, hy woxdbe abt peo oa tee bles it : “The ie aes el 4 Peoples Scunly Coripany are S142 wl the sts is ne $000, i ‘Tis means he tans ts tae def ance pach of Fie es, and { \ the amount of dct remaining is quite lange (xe half he toa of fixed ants) As ! sow conse, accounts ca ia sary el cone sins oa sige ee ' Aronshpsf tes Fey pres on cased bane et, teiaisabo matt Wp wel The ised ets ot ‘Comparative Statements, Trend Analysis, and Common-Size Statements In sreon 82, you worked wth percentage anges, nd masts cen See come sates Accounts apt the Sane eeaigge hn hs see "To spa het carlton for changes amount pevesagss. aco tans prepive conpaalvefmnchl sists A comparative foaneal state ‘men pests tes for sence seas eb ue colt, Ba aoe | Ststcrcits an blige est may fe shovn nconmertve fo Te conan. Tietsince set fr Apolo Pung player 813Foune 8.13 APOLLO PANTING ‘hen opto Pong reese (are se wm mor eeaniay Ge ee me NAR S70 2 Free pe S30 ‘t Bi Cs shew _i san ° Sues sorese urna a8) f Yan hce jin 130 javeen 9 ~ cts Pe sym $1900 $7450 seer 41800 $000 (som ‘oni curv Siontoat she — aT Toultablees ad Egvey 7955214 nua gs Thee cou sgl ie Sato Tor eugse incre in ales. Heer thet ha bee 9 sgn inceae sae Pesta te incease maces ecehabie was uc tocstomers nnn to Ant hey no longer py there mi ox heute fs Nad bay its spp. Ts possi sens supported bythe atta ces tenet iy 27Secean@ ln Somes ile or no chong shou! te Mg 83 caus or coneen. stance, pees Apolo Priming spt a oot elo nan ney ts ‘oa ses hough aentsing et the euity ge boy 0 Did he aver ‘ngreaty boosts? Di ctor oer se in th gro el Sha ‘Me advertising lot be conto Comparative fnaeal statements se veh nt ony fo He anne hy provi, bt alt forthe asin ty generate Trend Analysis Yous Seti 82 th fmation Gams aoe seemed sespel siet fortran aa Sey eta drs tnd om tee ea at ‘ese to ng presented ox aia of concute pene ‘The workin cpa for Apo Puiting Is sbown we fe yeu Jat At Peueat | roune 8.14 —. ‘Te rendansies Sauncown. evorengapeto T7070 2 seme | | we ce =} brew howwaing | see toms soe sms stoe | cous ete y/ eam lon nen | seem tnnregeia | - —— | tector Gers na ct to pb bins ih esta ace a rig —— ota ro 2001 fo 202. Whe the fv sare sand fone ae ta se | fo ou ‘nas been minal growin fact, een tough the nna af work rapa ‘gee ‘proved in 202 Ks tl blow th ee eae te pear 200Common 1 Statements Forsxmpl, tbe Accounts Receable percentage cle follows com aan 00 For Apolo Pini the common ae balance setae Figure 815 | maune 8.15. iz nog OUD PaAITING | 1 — COMMON S22 BALANCE Se cee Decent. 290 ND ob asers ro cos Resse rng Spas il re ns (e Ecupnene ) Teele eoumes re ase | Sorel recreate | soepie oom ‘ovens equry Brennan a Since every ge died by the tte ass, scons an commune ‘Splmations in xenvay anguoge For exile, n accountant conor ae of Apoko Printings assets const of Fel atts 72 lon aneae at ‘vy dol to be ree, Common size lines shets become een noe wei whe compaving bus: nesses of regal se‘Wht ste nasusdto pate etalane sheets inter chapters histen? Desc he et fon oh acest [She the mvaning of he wor ase as put aca sates ‘ive emit on nat noose ame the 8 habit elaeiations the balan set n ge 82, The equity section of he alae het ae yp fo thee ges the Wovkaleet Win i hse he fies? ‘What ie oFtabites mat yp wt wth xd assets? ‘What the ane stement that presets gees fr sucess yours ‘What lo yu ist fookfor when stag ome ancl semen?eer 8.4 | Accountability Accomeng dt pst ietion kon aecomtsl the conpy offers obigaton to show ha we they hae been sonaging the conn: Manegenet rns rode tone oe pvr ance. This equi ae tenet estan Users of Financial Statements ‘Toe he grows who se Manca steers os commonly a: 1. aleigerMtagers ebay use tbe far statrens ore han anyother vip. They catty stay he statements in ener to muons eels ea ‘ec. ad ost weaaesaes The strep rap ae Ser Ins detson ‘epee Nav owner ae Yt dy oh i naaig conan ‘se nancial semen rb the efor a spe ae ee the sonary forth, as wells o en abe coy athe aca % Ghote Creditors, ponicrytnkes ss for facil states rege ‘nt Tey use then 1 ay avon about v company's rope ste ai tomwat isan obigaions Bankers te sare hat hy areal tote cel "orotet he one ‘4 Sharotatters The x rues the corporations provide thie sarolles il tacit sateen ear The sete ve the ej ter "scomortes company They mas bese ane os props 5. Intestare aa tot Shares of pub coyorations ate tad ty stockbeo- ‘ers thou stock exchanges. The eplyees of tc bokeage coens ‘cyte lvestor say fore abo he fas eos th ead Ing thet tnanclal separ Quality of Financial Statements ‘yo conse, acon salen eer inp to vo oes nbs nes Nataly ewe, ‘These saa ply ng pate een ‘rocess The eae of facil statenenasctee one bles shoes ‘or other should beable‘o eat the satemcntswittoutdene Teens ey ‘he sands ave beg mt moa onnpanie te requ o hve ot donee ‘vt An aut a ical vevew bya publi accountant othe ral conto fae accountng recnts of company. The aust makes pido sel the fauness ofa conparys nani! stterents Before you ean produce top-notch financement, tea GAAPS hat You sei in ado ote ones treed rene chenGAAP—The Consistency Principle ‘Tae consistency principle ees that a sin lng thd nl proces op oe ‘theres change in meth fo one paid 1 rst ea neat th change The aes of to assume at consiacy hee Dean spi change n yocele "he consistency peep prevents peopl stents y chngng vets accounting Invses are famed Ifthe ciany hd by teats ok bet by tat sone sen eis nat ben eee GAAP—The Materialty Principle or eas, suppose 3 $4 inven Financ statevets ave pts, andthe income forthe Jae ti a. the ‘ses might make sig he Bins ia. leant i lation fo eset aco igo acorved ate eames aa eopri #8359 00 net J Yor ater ay esos res. beatte th 83 wo si. GAAP—Tho Full Diselosure Princ Some tens that are necessry for an unde ors na tet he lege secu Torn at accompanying notes For xan sipposthas tenia company» eng str alo so lary empayes who cnet the eat ‘ho teaders fan sees hy means (ies expen frst that eae on Pats company keer$e Review Ques |: Shuts probe te not mpora use for aeconing daa 2 What i wean By accom tay? 2 Give reasons why wansges equ nant stents. Rate ve gropsoftin ls who ae for ateends, §. Noy woul an absence ner xa aca sate fr hiorherdasnes? 4 Ny do tanks ston nea alent om tases ec sect ney? 1. Noy do convortens provide hee shatters with anil pont? Nu dosocktrokesbian copesafhe Mana ports oye ex gas? 3 Wy shoul ser ottnancia saenerts be ale ete oats 40. Given expression for“areountng santo: Hh Wha ana? Wat sponse 12 Expl the comiteny prince 13, Exon the naterly prince 4. Exp sel stn ie Exercises 4 Brieny ansne the lowing questions ‘A ho i roped by Law to provide sal stones as evidence of cco? 3, Nho wou be seed to provide Msc satements as ene of account even et req day? © Gwvertnee ways manages! es deaf he fn satements Do ot inci nosed oie, , What can an absttce ove die o hes ol ali wth ihe ei of the bine a ow othe finances How bo (esos eating he tical sopors) col an absence on iy sored of cpa ates? 7 Bans smitines ke sift ation to proet tan sh they tte as ee a Ws acon do you kta hey wn se ual tanks obtan seit" before iW doce hea 5, ea vont secre wy 6H eo al nea ae 1 Wht nigh tanks nist on inorder tae soa ey have tee gh le fac tater Wha ona sharehode whos ot hay whe progr of corporation oabaut x? K. Compare nha can done a gestion 10 ove wih wat one done ‘Ruston above. Which faa the abenic¢ on atcha ‘sore power to cag he ston? | Assume hat youl 9 ge sa af ey in busts dal Asan the tht you ree a ienaton fom sie faa satan ‘ofwhich proved to Le msn. What mig judo cboas hes