Key Steps for Keeping the Books
Part of the Bookkeeping Kit For Dummies Cheat Sheet
Bookkeeping is, among other things, a step-by-step process that lets you methodically track the transactions in your company’s books. Monitoring a transaction every step of the way helps bookkeepers keep an eye on the bottom line at all times. Check out the following keys to bookkeeping success:
Transactions: Make purchases or sales of items to run your business and start the process of bookkeeping.
Journal entries: Enter transactions into the books through journals.
Posting: Post journal entries to the General Ledger.
Trial balance: Test accounts in the General Ledger to see whether they’re in balance.
Worksheet: Enter on a worksheet any account adjustments needed after the trial balance.
Adjusting journal entries: Post adjustments from the worksheet to affected accounts in the General Ledger.
Financial statements: Prepare the balance sheet and income statement using the corrected account balances.
Closing: Close the books for the Revenue and Expense accounts and start the entire cycle again with zero balances in both accounts.