Question

What is the purpose of the worksheet? In a columnar worksheet similar to Illustration 2A-1, what would be the result of incorrectly transferring the balance in a liability account to column K, the credit column under the income statement?

Option 1: Worksheet Purpose
Option 2: Columnar Worksheet
Option 3: Liability Account Error
Option 4: Income Statement Impact

Answer 1

The purpose of a worksheet is to organize and summarize financial data. Incorrectly transferring the balance in a liability account to the income statement column would result in an error and misrepresentation of the company's financial position.

Step-by-step explanation:

The purpose of a worksheet is to organize and summarize financial data. It is a tool used in accounting to prepare financial statements and analyze the financial position of a business. A columnar worksheet, like the one in Illustration 2A-1, is used to record and calculate the balances of different accounts.

If the balance in a liability account is incorrectly transferred to column K, the credit column under the income statement, it would result in an error. The income statement is used to report the revenues, expenses, and net income of a company. Liability accounts represent the debts or obligations of a company, so incorrectly transferring the balance to the income statement column would misrepresent the company's financial position.