Key Steps for Keeping the Books - dummies

By Lita Epstein

Part of Bookkeeping 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:

  1. Transactions: Make purchases or sales of items to run your business and start the process of bookkeeping.

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

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

  4. Trial balance: Test accounts in the General Ledger to see whether 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 General Ledger.

  7. Financial statements: Prepare the balance sheet and income statement 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.