Key Steps in Keeping the Books
Any workflow or work process has its key stages or steps – a part of the process where you must remember to perform a certain action. In bookkeeping, the key steps are as follows:
Transactions: The purchases or sales of items start the process of bookkeeping.
Journal entries: Enter transactions into the books through journals.
Posting: Post journal entries to the Nominal Ledger.
Trial balance: Test accounts in the Nominal Ledger to see if 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 Nominal 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.