Accountaccount period

credit

debit

Ledgers

revenue

suppliers

transactions



Business have to keep a complete and accurate record of all (1) ............................ Bookkeeping is the recording of day-to-day sales and purchases, or (2)................ received and payments made. Bookkeeping is usually performed by a book keeper, sometimes also called an accounting clerk or account clerk.

In very simple accounting systems, bookkeepers keep a record of transactions made during the day, in the order that they take place, in journals or books of original entry. In double entry bookkeeping, transactions are recorded in two journals, a (3).........................

Journal for payments made, and an equivalent (4).................. journal for payments received. Double entry bookkeeping record the equal and opposite effect of every transaction – it increases one (5) .................. and decreases another one by the same amount. As there are two journals entries for every transaction recorded, the double - entry system provides a check against errors.

At a later date, the temporary records in journals are transferred or posted to account books or (6)................... that summarize each type of financial transaction. Business often have a sales ledger, recording transactions made by customers (money that has been or will be received), a purchase ledger or bought ledger, recording the purchases made by the business from (7)............. (money that has been or will be paid), and a general ledger or nominal ledger containing all the balance sheet accounts (assets, liabilities, and equity) and income statement account (revenue and expenses). All the accounts in the general ledger in which transactions can be posted are listed in a chart of accounts.

Ledger show the beginning and ending balance of each account- how much money is in the account at a certain time. Of course, these days most books and ledgers don’t exist on paper but in the form of computer software.


Bookkeepers periodically do a trial balance, a listing of the balances of all the accounts in the general ledger, to make sure that the total amount of debit balances is equal to the total amount of credit balances. At the end of an (8) ..................... the totals of the accounts in the ledger are transferred to the company‘s financial statements- the balance sheet and the income statement or profit and loss account. Balance sheet accounts are permanent or real account – their balance carry forward to the next accounting year. Income statement accounts are temporary or nominal accounts which are closed at the end of the accounting year-closing entries are made setting all the revenue and expense balances at zero.

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