 Hello, and welcome to the session. This is Professor Farhad. In this session, we would look at a worksheet, accounting worksheet. This topic is covered in financial accounting. Also, when you do an audit, you are, you work with a worksheet, but you are introduced to this topic in financial accounting, and in the real world, worksheet is used in the real world, whether you are preparing financial statements or even in an audit. In this session, we would look at a worksheet from an introductory perspective. What are the various components of the worksheet? How do we prepare a worksheet? And hopefully that will be good enough to get you started. As always, I would like to remind you to connect with me on LinkedIn if you haven't done so. YouTube is where you would need to subscribe. I have 1,600 plus Accounting or I think Finance and Attacks Lectures. If you like my lectures, please like them. Click on the like button. It doesn't cost you anything. Share them with others. If they benefit you, it might means they might benefit other, so why not? Share the wealth, and please connect with me on Instagram. On my website, you'll find additional resources such as practice exercises, true, false, multiple choice. If you're studying for your CPA exam, 2,000 plus CPA questions. I strongly suggest you visit my website. So let's look at a worksheet, and specifically, it's going to be a 10 column worksheet, and you're going to see why it's called a 10 column, because you're going to have 10 columns overall. So what I did, I hide this worksheet, and I'm going to show it to you step by step. So this way, if I show it to you all at once, it might be overwhelming. I might lose you. So the best way to do it is to show you a worksheet step by step. So here's the company name. The worksheet is the worksheet, and for the period ended December 31st, for month ended December 31st. So in the first thing we have to do is list the accounts that we are using, and we list them just like a trial balance with their identification number from, you know, assets are identified with one. So they start, notice, cash 101, accounts receivable 102, supplies 126, so on and so forth. So the first thing is we want to make sure all our accounts are listed there. Then we're going to start with the first two columns. So this is column one, and this is column two, and you're going to see why it's called a 10 column worksheet. Under this column, you're going to have the unadjusted trial balance. Now what is the unadjusted? It means before you prepare the adjustments, you are giving an unadjusted trial balance, then you prepare the adjustments. Under the unadjusted trial balance, total debits should equal total credits. Obviously this is a trial balance, and those are the unadjusted. Then you'll prepare your adjustments, and hopefully you already prepared your adjustments, and what we did, if you go back to the scores and the lectures in the scores, we did prepare all these adjustments. So in the assessment A, we credited prepaid and debited insurance expense. Transaction B, adjustment B, we debited supplies expense and we credited supplies. C, we debited depreciation expense, credit accumulated depreciation. D, we debited unearned revenue, credited revenue. E, we credited the salary spable and we debited salaries expense, and F, we debited account receivable and we credited revenue. So those were the adjustments. Also the adjustments, since it's an entry, total debits equal total credits. Notice total debits equal total credits. So we have one, two, three, four columns so far. So so far four columns. Then what we do next is we prepare the adjusted trial balance. What is the adjusted trial balance? Basically taken the unadjusted, determine whether there was a change, then put the adjusted, which is the final number. So let's start with cash. The cash debit is 42.75. It wasn't adjusted, therefore the balance should be 42.75 debit balance. Account receivable starting at zero. Then we debited account receivable, 1800, then it's 1800. Supplies, we started with the debit balance of 97.20. We credited the balance 1,050. Let me compute the difference. And the difference will be the adjusted balance for supplies. So 97.20 minus 1,050. It's 86.70. Prepaid, we started with 2,400. We reduced it by 1,000. The balance should be 2,300. Now let's show you the balances. And here are the balances. Equipment is the same. Accumulated depreciation, we started zero. We credited the account 300. Therefore, we have a credit balance of 300. And you can keep going with the remaining balances. For example, consulting revenue was credit of 5,800. We credited it 250. We credited 1800. Therefore, the ending balance is 78.50. Same thing with if we take salary's expense, it was 1,400. Then we debited 210. The debit balance of 16.10. So those are the adjusted balances, or simply the final balances that we're going to be preparing the financial statement with. Again, those balances, this adjusted trial balance will balance. The total debits will equal the total credits. And now we are up to six columns. One, two, three, four, five, six. Now, once we prepare the adjustments, now we are ready to kind of separate our accounts into income statement account and other accounts. They call them balance sheet, but really, you know, the dividend goes there as well. So here's what's going to happen. Once I remove this, the following block, all the income statement account, which are revenues and expenses, they're going to go under this column right here. And the remaining accounts, which are these, they will go under the balance sheet. So let's do that. So let's go ahead, move the revenues and expenses under the income statement and everything else to the balance sheet. So this is what we have now. Obviously, what's going to happen, we're going to add the columns. We're going to add the debits for the income statement, and we're going to add the credits to the income statement. And obviously, hopefully, you know that the debits most likely will not equal to credit. Why? Because in the credit we have the revenue and the debit we have the expenses. And if they equal to each other, it means we are breaking even it could, but most likely not. And what we like to see, we would like to see more credits than debits. Now, notice we have 8150 credit, 4365 debit. If we take the difference between those two, if we take the difference between those two, it's going to be 3785. And what do we call the difference between revenues and expenses? Net income. So if we have net income, we'll take the net income figure and we place it under the debit. So the net income is 38, 3785. Now, what's going to happen? If we have net income, we're going to also take the net income to the credit column of the balance sheet. In a sense, net income is increased and retained earning on the balance sheet. If it's a loss, it will go to the debit side. If we have a loss, the loss will be here. It will go to the debit side, but now we have net income. Now what's going to happen? Now we extend the totals. Notice there is the net income column right here. Now we extend the total. Now total debits under income statement will equal to total credits. In total debits under the balance sheet will equal to total credits. So once we extend the total, once we add net income to the picture and extend the total, they will equal to each others. Now, the columns would equal to each other. At this point, what's the benefit of the worksheet? Here's some benefits from the worksheet. For one thing, you would see all the adjustment on one page. So notice here, this is very helpful in the real world. When you are working with many accounts and you have different adjustments, you would look at the worksheet and you would look under adjustments and you would see all of them. You would see if something is missing, if something is wrong, it's just right in one place. Also, as you prepare the finance, as you prepare the adjustments, the other thing that the worksheet would do, especially if it's a computerized worksheet or if it's an Excel worksheet, as you change those figures, net income will change. So it's telling you what effect each adjustment will have because all the cells will be connected, what effect each adjustment will have on the bottom line, which is good to see. Also, once you prepare all your adjustments, you will see net income, which is good. It's a number that you want to see. So it has a lot of benefits and it's used in the real world. Therefore, you need to know what a worksheet is. Now, when you do an audit, same thing, you have to work with a worksheet. It's slightly different, not that much different. It's the same concept, same idea, but slightly different. So hopefully, you know what a worksheet is. You know how to prepare a worksheet in the next session. So from the worksheet, you prepare the financial statements. By the next session, we're going to move on to the closing process. Now, as always, I would like to remind you, if you like this lecture, please like, click on the like button. It doesn't cost you anything. It helps me tremendously. Share it. And if you're interested in additional resources, visit my website. If you want to invest a little bit more in your accounting career and your accounting education, studying for the CPA exam, it's worth it. Good luck and study hard. Accounting is worth the hard work. It will pay off.