Accounting Application of Electronic Spreadsheet

Lesson

Part 1 — what an electronic spreadsheet is, how workbooks and worksheets are organised, how to format and print, and how formulas and functions do an accountant’s arithmetic. Software is described generically; every firm is imagined.

In this lesson you will

Explain what an electronic spreadsheet is and state its utility, merits and demerits in accounting
Create, rename, copy and move worksheets, refer to another sheet, enter, navigate and save data
Format cells and set up pages for previewing and printing
Write formulas with relative, absolute and named references, and use SUM, AVERAGE, percentages, date functions and IF; freeze panes

Part 1 at a glance

Concept

What a spreadsheet is, and its utility

Table of accounting jobs a spreadsheet helps with: payroll, sales and commission, journal and ledger balances, debtors and due dates, budgets and what-if analysis, and reports and charts
Accounting job	How a spreadsheet helps
Payroll	Allowances, provident fund, tax and net pay by formulas copied down for every employee
Sales and commission	Profit on sales and slab commission by IF; totals and averages by functions
Journal and ledger balances	Debit and credit totals with an agreement check; balances by SUMIF
Debtors and due dates	Due dates and days overdue from date arithmetic; lists sorted and filtered
Budgets and what-if	Change one rate and see every result update
Reports and charts	Formatted statements printed or drawn as charts from the same cells

Concept

Merits and demerits

Table of merits of electronic spreadsheets, such as automatic recalculation, what-if analysis, functions, formatting, sorting and charts, reuse and easy correction, against demerits, such as silent formula errors, no double-entry control, overwritten formulas, weak security, limits on volume and the need for training and backups
Merits	Demerits
Automatic recalculation when any figure changes	A wrong reference or formula spreads errors silently
What-if analysis by changing one input cell	No built-in double-entry control: unbalanced entries are accepted
Formulas and ready-made functions	Formulas can be overwritten by typed figures
Formatting, sorting, filtering and charts	Weak security; no record of who changed what
One design reused every month	Unsuited to very large volumes and many users at once
Compact storage; easy correction and sharing	Needs training; files can be lost without backups

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