Key Steps to Keeping the Books
Part of the Bookkeeping For Dummies Cheat Sheet (UK Edition)
Bookkeeping involves following a set procedure of major stages. Take a look at these steps that detail the processes involved – from start to finish in the bookkeeping sequence:
Transactions: The purchases or sales of items start the process of bookkeeping, but there are other financial transactions such as nominal journals that will be posted too.
Reconciliations: Once all transactions are posted, you need to reconcile each of the bank accounts including credit cards.
Trial balance: A review of the Trial Balance will discover any anomalies or adjustments that exist or need to be made in the Nominal Ledger.
Adjusting journal entries: Once you have reviewed the Trial Balance, you may need to make correcting entries to the Nominal Ledger by posting journals. There may also be standard journals such as depreciation and stock journals that need to be completed.
Financial statements: Prepare the balance sheet and Profit and Loss Account 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.