Thursday, May 1, 2008

Tips to tally year-end accounts.

Tips to tally year-end accounts

MANY small business owners have to manage with minimal staff strength. They often leave the function of transactions, record keeping and accounting to inexperienced staff. Depending on how the accounting documents are filed and kept, the accounting personnel may face the following three scenarios:


Here, the owners have little or no knowledge of accounting and transactions record keeping. No accounting records or transaction records listing are kept. No separate recording of receipts and payments made. All the accounting documents, including receipts and invoices, are in a mess. Before you bring order to the accounts, the three steps to follow are: sort all the accounting documents by types and in chronological order; identify any obvious missing documents and take action to get a copy, and key in transactions in the accounts.

Start with the cheque butts and bank statements by entering transactions into the cash book and the relevant accounts in the general ledger. Since there was no recording of transactions throughout the whole financial year, it serves little purpose now, if you chose to record the transactions the conventional way to the books of original entry (Sales day book, purchase day book) and then post the transactions to the general ledger.

Before closing all the accounts and preparing the balance sheet and income statement, identify the credit transactions. Use journal entries to record and post these credit transactions in the respective accounts in the general ledger. Also, the financial year end inventory balance is required to be ascertained.


Accounting documents are filed by types and in chronological order. No cash book was maintained but a listing or book, which was used to record and describe each receipt and payment was maintained. In a way, this serves the role of cash receipts journal and cash payment journal. You need to go through the receipts and payments listing and segregate all the transactions into the respective types or groups and compute the total of each type or group of the transactions in accordance with the general ledger accounts items.

You just need to post the total of each type or groups of transactions by way of journal entries the cash account and the respective general ledger accounts. This should be performed month-by-month and also ensure the bank reconciliation is also performed month-by-month.


Cash book is used to record all receipts and payments and proper columns in the cash book are used to record each type of group of transactions in accordance with the accounts items in the general ledger. In these cases, the total of each column in the cash book is readily available at the end of each month. Most likely the monthly bank reconciliation statements are also prepared. You just need to record the total of each column in the cash book in the general ledger using journal entries.

Adapted from

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