What is a spreadsheet? Give some examples of its usefulness and also name some spreadsheet applications used in Accounting

January 2nd, 2011 Comments off
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A spreadsheet:

  • A computer program which provides the user with a template of rows and columns via the screen. By using the rows and columns of the template, the user can build financial and statistical models. Where the entries in some of the positions in the template derive from arithmetical operations performed on data entered elsewhere in the template, the program can be designed to calculate and make the entries automatically with a speed and accuracy greatly in excess of that to be expected from the user.

USEFULNESS OF SPREADSHEETS:

  • Using the “what if” module, able to simulate data to see what are the effects upon the model. For example, say reducing cost of goods by varying percentages to see what is the impact to the sale.
  • Able to print any part of the spreadsheet and to print in graphical form like charts and diagrams.

EXAMPLES OF SPREADSHEETS APPLICATION:

  • Operational or functional budgets
  • Master budgets (forecast profit and loss accounts and balance sheet)
  • Cash flow charts
  • Capital expenditure appraisals using NPV and IRR
  • Estimates for jobs and contracts
  • Costing of product
  • Financial and statistical projections of sales
  • Profit projections using cost-volume-profit simulation.

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Financial Accounting

 
 

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