In which balance sheet column is a net loss recorded on the work sheet?

• A. In the credit column of the balance sheet section
• B. In the debit column of the income statement section
• C. In the debit column of the balance sheet section
• D. In the credit column of the income statement section

Answer: (C)

Verified step by step guidance

1. Understand the structure of a worksheet: A worksheet is a tool used in accounting to prepare financial statements. It includes sections for the trial balance, adjustments, adjusted trial balance, income statement, and balance sheet.
2. Recognize the impact of net loss: A net loss occurs when expenses exceed revenues. This affects the equity section of the balance sheet, as it reduces retained earnings.
3. Determine the placement of net loss: On the worksheet, a net loss is recorded in the debit column of the balance sheet section because it decreases equity (retained earnings).
4. Understand the relationship between the income statement and balance sheet: The net loss is first calculated in the income statement section and then carried over to the balance sheet section to adjust equity.
5. Verify the correct column: Ensure that the net loss is recorded in the debit column of the balance sheet section, as this reflects the reduction in equity due to the loss.