When a worksheet is used:
A)Adjusting entries are not prepared,since adjustments are shown on the worksheet.
B)Revenue and expense accounts do not have to be closed to the Income Summary account,because the income statement is prepared from the worksheet and net income is already computed.
C)Financial statements may be prepared before recording adjusting and closing entries in the accounting records.
D)The Income Statement column and Balance Sheet column of the worksheet eliminate the need to prepare formal financial statements for a business.

Question

Quizplus · Accepted Answer

A worksheet is a tool used by accountants to prepare financial statements. It allows for adjustments to be made and for financial statements to be prepared before finalizing the accounts with adjusting and closing entries. Therefore, option C is the best choice. Options A and B are incorrect because adjusting and closing entries still need to be prepared after using a worksheet. Option D is incorrect because a worksheet is not a substitute for formal financial statements, but rather a tool to help prepare them.

When a Worksheet Is Used