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:

  1. Transactions: The purchases or sales of items start the process of bookkeeping.

  2. Journal entries: Enter transactions into the books through journals.

  3. Posting: Post journal entries to the Nominal Ledger.

  4. Trial balance: Test accounts in the Nominal Ledger to see if they’re in balance.

  5. Worksheet: Enter on a worksheet any account adjustments needed after the trial balance.

  6. Adjusting journal entries: Post adjustments from the worksheet to affected accounts in the Nominal Ledger.

  7. Financial statements: Prepare the balance sheet and Profit and Loss Account using the corrected account balances.

  8. Closing: Close the books for the revenue and expense accounts, and start the entire cycle again with zero balances in both accounts.

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Bookkeeping For Dummies Cheat Sheet (UK Edition)

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