# How to Use Microsoft Excel for Accounting

Microsoft Excel is a spreadsheet software application that can be used as an accounting tool. When you create an Excel document, it resembles a grid comprised of individual cells. A cell is identified by its position in a row and column. Rows are identified by number ,and columns are identified by a letter. If a cell is C3, that means the cell is located in row C and in the third column. Text, numbers and calculations can be inserted into the individual cell. When a calculation is inserted into a cell, you are instructing the program to make a calculation using numbers in cells you identify. The answer will appear in the cell where you inserted the calculation.

#### Step 1

Add a row of numbers together to get the sum total. You can insert the date of each transaction. If you type the month and year, the program will automatically abbreviate. For example, "March 2008" becomes "Mar-08." Next to the dates, type the expense amounts for each month. To add the column, highlight the row with the cursor and then click the "Auto Sum" icon at the top of the menu, which looks like Σ.

#### Step 2

Add the totals of the expense. For example, if you keep a spread sheet listing all of your electric and water expenses for the year, you may want a total of your utility costs. Click the cell where you want that total to appear, and the cell will become outlined. At the menu bar, type in the equation. In the pictured example, we typed in =B14+E14. This tells the program to add together whatever numbers are in cell B14 and cell E14.

#### Step 3

Deduct your expenses from your sales. In the pictured example, the only business expenses the person had were utilities and rent. These expenses were listed in two rows, and each row was calculated to give a total. The two totals were then added together. In another row, there is a list of monthly sales and that row is totaled. The program can then be instructed to deduct the total expenses (D15) from the total sales (E15) to give the net sales. If any of the amounts are changed, such as changing the electrical expense in March from \$345 to \$400, all of the totals will automatically adjust to reflect the correct amount.

### Tips & Warnings

• You can perform more elaborate calculations, where you can instruct the program to add, subtract or find percentages of different cells by typing in the appropriate mathematical equation in the menu bar.