Chapter 7 Preparing A Six-Column Work Sheet Learning Objectives • • • • • Explain the purpose of the work sheet. Describe the parts of a six-column work sheet. Prepare a six-column work sheet. Calculate net income and net loss amounts. Define the accounting terms introduced in this chapter. Work Sheet • A working paper used to collect information from the ledger accounts on one sheet of paper. Ruling • “Drawing A Line” • In accounting, a single rule drawn under a column of amounts means the entries above the rule are to be added or subtracted. Matching Principle • In accounting, expenses are always matched against revenue for the same period. • See page 139 Net Income • The amount left after expenses for the period have been subtracted from revenue for the period. Net Loss • When total expenses are greater than total revenue. Summary Of Key Points • The sixth step of the accounting cycle is preparing a work sheet. • A work sheet is prepared to pull together all the information needed to complete the end of the fiscal period work. • The trial balance section of the work sheet is completed first. Until the debits and credits are equal you can not start your income statement and balance sheet sections. • Trial balance amounts are extended to the balance sheet sections and then to the income statement section. • The work sheet is used to calculate the net income or net loss.