In This Chapter
Making adjustments for non-cash transactions
Checking your Trial Balance
Adding to and deleting from the Chart of Accounts
During an accounting period, your bookkeeping duties focus on your business’s day-to-day transactions. When the time comes to report those transactions in financial statements, you must make adjustments to your books. Your financial reports are supposed to show your business’s financial health, so your books must reflect any significant change in the value of your assets, even if that change doesn’t involve the exchange of cash.
If you use cash-based accounting, these adjustments aren’t necessary because you only record transactions when cash changes hands. We talk about accrual and cash-based accounting in Book I, Chapter 2.
If you’re following the checklist we suggest in Book II, Chapter 1, we assume, in this chapter, that you’ve already entered/completed the following:
All the above entries are routine transactions for the month. However, you also need to make some other types of adjustments. This chapter reviews the types ...