The Definitive Guide to Business Finance: What smart managers do with the numbers, Second Edition

The scorecard revisited

If you ask your computer accounting system to print a detailed trial balance for, say, the first month of your new business, it will produce a tidy list of all your accounts, showing the transactions during the month and the ending balance of each account. The terminology is a throwback to when daily transactions were written up by hand in journals, and totals were transferred to the ledgers (main books of accounts). At regular intervals, clerks would write down the balance of every account and check that the sum of all the debits equalled the sum of all the credits. Looking down this trial balance – your ledgers – will be instructive. You will find it gives you a good feel for what is happening in your business. The bank ...