Book III

Adjusting and Closing Entries

Check out www.dummies.com/extras/accountingaio for specifics on how to adjust your accounting records with accruals and deferrals.

In this book…

• Choose the best depreciation method for your long-term assets. Assets are used to generate revenue, and depreciation expenses the cost of the asset as it's used in business.
• Account for interest your business pays or receives. If your business borrows or lends money, it pays or collects interest. Either way, you need to account for that interest.
• Prove out the cash to ensure that what's on paper matches the real dollar amounts in a store or office. Your cash account typically has a lot of transactions. As a result, you need to carefully account for cash to ensure that all the activity is properly recorded.
• Reconcile accounts and confirm that your journals and general ledger are correct. Reconciling your books is a great way to check your work, correct any errors, and even spot signs of fraud!
• Double-check your books by running a trial balance, correct any errors, and prepare a financial statement worksheet. A trial balance lists all your accounts and their dollar balances.
• Adjust the books in preparation of preparing financial reports. Trial balances are adjusted before being used to create financial statements to ensure accuracy in financial reports.