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Bookkeeping For Dummies, Australian and New Zealand Edition by Lynley Averis, Veechi Curtis

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Chapter 16

Creating Financial Reports

In This Chapter

Understanding birth, death and rebirth — the karmic accounting life cycle

Discovering the mother of all debits and credits — your first trial balance

Transforming the trial balance into something useful

Starting a new accounting cycle

In this chapter, I talk about how to construct Profit & Loss and Balance Sheet reports from scratch. The more computer-savvy of my readers may be wondering why I go to all this trouble. After all, if you use accounting software, generating a Profit & Loss or Balance Sheet report is as simple as clicking a single button, isn’t it?

The reason why I explain how to build these reports from scratch is this: Understanding the mechanics behind the construction of financial reports enables you to understand the whole accounting cycle from beginning to end. This gives you a deeper understanding into how the transactions you record impact on financial reports and, ultimately, into the reports themselves.

Of course, if you have accounting software and you aren’t remotely interested in discovering how financial statements get constructed — maybe you’re the business owner and all you want to know is whether you’re making a profit or not — then by all means skip this chapter. I won’t be in the least offended.

Reviewing the Accounting Cycle

Whether you do books by hand, with a spreadsheet or using accounting software, the accounting cycle remains the same. The difference with accounting software is that much ...

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