Question

Why do some accountants prepare an end-of-period spreadsheet?

Answer 1

End-of-period spreadsheet - Meaning:

                End-of-period spreadsheet refers to a six-columner or ten-columner schedule containing data

                related to account titles, un-adjusted trial balance, adjustments, adjusted trial balance, income

                statement and balance sheet. Six-columner is restricted to contain data related till adjustments

                whereas ten-columner spreadsheet is designed to contain all data. Each component mentioned

                above will occupy two rows namely 'Debit' and 'Credit' and at any cost, totals of 'Debit' and 'Credit'

                shall be equal which is the checking point in terms of mathematical accuracy of the data posted

                into respective ledger items.

End-of-period spreadsheet - Working method:

                In end-of-period spreadsheet, the subtotal row of both income statement and balance sheet

                columns will never be equal if the firm has earned profit or loss; will be equal if the firm is at

                break-even level, that is, no profit - no loss situation. The difference between totals of debit

                and credit of both income statement and balance sheet blocks is nothing but the profit or loss

                earned or sufferred by the firm during the reporting period for which the spreadsheet is                 prepared. If totals of debit exceed credit of income statement, it is considered as 'loss' sufferred;

                otherwise 'profit' earned. Similarly, if totals of debit of balance sheet exceed credit of balance

                sheet block, it is considered as 'profit' earned; otherwise 'loss' sufferred. However, the difference

                in totals of debit and credit under both income statement as well as balance sheet blocks shall

                be the same at any cost.

End-of-period spreadsheet - How is it useful for the accountants?

                As the spreadsheet contain all data from unadjusted trial balance thru balance sheet in a single

                page, in case of 10-columner spreadsheet, accountants could gain good control over all such

                adjusting entries recorded at the period-end. If any errors were made in terms of wrong posting

to credits and debits in terms of mathematical figures, the spreadsheet will throw error
immediately. So, accountant will be in a position to trace such error in recording in respective line item and will be able to rectify the same easily. Also, both income statement and balance sheet blocks are prepared from the figures of udjusted trial balance. So, firm's income earned or loss sufferred during the reporting period can be easily calculated by looking at the end-of-period spreadsheet itself instead of calculating after preparing financial statements. The end-of-period spreadsheet serves as a self-evaluating tool in terms of mathematical accuracy as well as a single medium that explain both mathematical accuracy of data recorded and financial performance of the firm.