Unit 2: Accounting through MS

Excel
2.1-An overview concept of Spread Sheet application
• Spreadsheet application software package organizes data into a table of values
arranged in rows and columns.
• Each value can have predefined relationship with other values. Spreadsheet
software allows users to perform data calculations, data manipulations, data
analysis, business analysis, generating charts and reports, planning, modeling
etc.
• In a spreadsheet, each value is placed in a cell. We can define what type of data
is in each cell and how different cells are depending on one another.
• Once we have defined the cells and formula for linking them together, we can
enter data and analyze the result. Furthermore, we can simulate the result by
modifying the selected data values to see how the result changes accordingly.
• Excel, Lotus 1-2-3 and Apple Numbers are some examples of spreadsheet
software. MS Excel is the most popular spreadsheet application. They simulate
paper worksheets by displaying multiple cells that make up a grid (worksheet of
rows and columns). Developing a spreadsheet involves designing its format and
developing the relationship that will be used in the worksheet.
• Most packages help you develop charts and graphics displays of spreadsheet
results. Spreadsheet applications have a wide range of uses-from family
business to corporate earnings statements.
2.2-An overview concept of MS Excel and possible uses of MS excel in accounting.
2.2.1-Introduction
• Microsoft Excel is an application software developed and manufactured by
Microsoft Corporation that allows users to organize, format, and calculate data
with formulas using a spreadsheet system broken up by rows and columns.
Microsoft Excel usually comes bundled with Microsoft Office and is compatible
with other applications offered in the suite of products.
• Microsoft Excel is the most popular spreadsheet program on the market today.
You can use the program to track and manage large quantities of data, such as
inventories, price lists, expenses and expenditures, and much more. You can
even use Excel as a database, entering and sorting records.
• Microsoft Office Excel was designed to support accounting functions such as
budgeting, preparing financial statements and creating balance sheets. It comes
with basic spreadsheet functionality and many functions for performing
complex mathematical calculations. It also supports many add-ons for activities
such as modeling and financial forecasting, and seamlessly integrates with
external data to allow you to import and export banking information and
financial data to and from other accounting software platforms.
2.2.2-Budgeting and Statements
Microsoft Office Excel ships with templates for creating budgets, cash-flow
statements and profit-and-loss statements, which are some of the most basic
documents used in accounting. In addition, you can download more complex
budgeting and statement templates from the Office website, or purchase
specialized templates from third-party vendors and install these in the application.
If you need to create complex or custom budgets or financial statements, you can
either customize an existing template and re-use its elements, or create one from
scratch using the functionality built into Excel.
2.2.3-Spreadsheets
Performing line calculations is a basic accounting task, and Excel spreadsheets are
designed to contain data in a tabular format that supports both in-line and
summation calculations, replacing the need for ticker tape and special accounting
calculators. The data in the spreadsheet is reusable and storable, making Excel
more flexible than an accounting calculator for performing simple calculations and
summations. Additionally, you can create charts and graphs from the spreadsheet
data, creating a media-rich user experience and different views of the same data.
You can also use add-ons to mine the data and create models and financial
forecasts.
2.2.4-Present Data
You can use Excel’s formatting tools to make your spreadsheet data easier to read
and interpret. For example, you can add shading to cells, change the number
format, or change the font and size of your data. You can present your worksheet
data to others using charts and graphs. Excel’s graphing and charting tools make it
easy to turn your data into meaningful visuals, such as pie charts, bar charts, and
more.
2.2.5-External Data
You can import data from many different data sources into Excel. This is especially
useful for accounting as you can pull sales data, banking data and invoices from
many sources into one central workbook to support your accounting activities. The
data can be stored in different databases and file formats prior to importing,
allowing you to access data from many different areas of your business without
having to do additional data entry.
2.2.6-Integration
Excel integrates with many popular accounting software applications. For example,
you can use the wizards that ship with your preferred accounting software package
to map Excel spreadsheets to your accounting data so you can perform push and
pull data operations from both Excel and your accounting package on demand.
Basic Terms Used In Excel
Columns and Rows
Worksheets are formatted as a grid formed by columns and rows. Each worksheet
has 16,384 columns and 1,048,576 rows. Every column and row has a unique
identifier. Columns are labeled by letters arranged alphabetically, and rows are
numbered.
Cells and Cell Addresses
Every intersection of a column and a row creates a cell. Cells are the receptacles for
your Excel data. Every cell has a unique name, also called an address or cell
reference, in the Excel worksheet. Cell names consist of the column and row
number, with the column always listed first. For example, cell A1 is the first cell in
the worksheet. The next cell to the right is B1.
Active Cell
The active cell in a worksheet is always surrounded by a highlighted border, called
the selector. The Name box, located on the far left side of the Formula bar, always
displays the name of the current cell.
Cell Ranges
As you work with data in a worksheet, you can group related data into a range. A
range is simply a group of related cells that you can connect. A range can also be a
single cell or an entire worksheet. By grouping cells into a range, you can apply
formatting or printing to the entire collection, or move or copy the range data at
once. Ranges are particularly useful when you begin creating formulas that
reference groups of cells.
Worksheet Tabs
By default, every Excel workbook starts out with three worksheets. Each worksheet
is identified by a tab at the bottom of the sheet. The active worksheet always
appears at the top of the stack. You can add more or less worksheets as needed
using the Insert Worksheet tab to the right of the three worksheet tabs. You can also
give your worksheets unique names to better identify their content.
Formula Structure
Ordinarily, when you write a mathematical formula, you write out the values and the
operators, followed by an equal sign, such as 2 + 2 =. In Excel, formula structure
works a bit differently. All Excel formulas begin with an equal sign (=), such as =2+2.
The equal sign immediately tells Excel to recognize any subsequent data as a
formula rather than a regular cell entry.
Referencing Cells
Although you can enter specific values in your Excel formulas, you can also easily
reference data in specific cells. For example, you can add two cells together or
multiply the contents of one cell by a value. Every cell in a worksheet has a unique
address, also called a cell reference. By default, cells are identified by a specific
column letter and row number, so cell D5 identifies the fifth cell down in column D.
To help make your worksheets easier to use, you can also assign your own unique
names to cells. For example, if a cell contains a figure totaling weekly sales, you
might name the cell Sales.
Cell Ranges
A group of related cells in a worksheet is called a range. Cell ranges are identified by
their anchor points, the upper left corner of the range and the lower right corner of
the range. The range reference includes both anchor points separated by a colon. For
example, the range name A1:B3 includes cells A1, A2, A3, B1, B2, and B3. You can
also assign unique names to your ranges to make it easier to identify their contents.
Range names must start with a letter or underscore and can include uppercase and
lowercase letters. Spaces are not allowed in range names.
Reference Absolute and Relative Cells
Cell referencing is the method of using cell address in formula. The calculation in
the worksheet is very effective by the use of cell referencing because any update of
values in the cell automatically updates the result in the other cells. There are three
types of cell referencing.
• Relative cell reference
• Absolute cell reference
• Mixed cell reference
By default, Excel treats the cells you include in formulas as relative locations rather
than set locations in the worksheet. This is called relative cell referencing. For
example, when you copy a formula to a new location, the formula automatically
adjusts using relative cell addresses.
If you want to address a particular cell location no matter where the formula
appears, you can assign an absolute cell reference. Absolute references are
preceded with a $ sign in the formula, such as =$D$2+E2. A mixed cell reference
combines both relative and absolute cell references. We can effectively lock either
the row or the column in a mixed reference.