Key Steps in Keeping the Books - dummies

Key Steps in Keeping the Books

Part of Bookkeeping Workbook For Dummies Cheat Sheet (UK Edition)

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.