Accounting All-in-One For Dummies, with Online Practice, 2nd Edition

Chapter 1

Keeping the Books

IN THIS CHAPTER

Getting a bird’s-eye view of accounts and transactions

Establishing your accounting system

Closing out at the end of a period

Individuals can get along quite well without much bookkeeping — but the exact opposite is true for a business. In addition to facilitating day-to-day operations, a company’s bookkeeping system serves as the source of information for preparing its periodic financial statements, tax returns, and reports to managers. The accuracy of these reports is critical to the business’s survival.

Obviously, then, business managers have to be sure that their company’s bookkeeping and accounting system is dependable and up to snuff. This chapter shows you what bookkeepers and accountants do, mainly so you have a clear idea of what it takes to be sure that the information coming out of the accounting system is complete, timely, and accurate.

Analyzing the Effect of Business Transactions

This section walks you through the basics of bookkeeping, including the rule of debits and credits and why proper debiting and crediting keeps the financial statements in balance. You also discover the five steps for entering transactions into ...