Formal accounting records explained by our small business accountant in Melbourne
When handling formal accounting records, it is important to understand that the journal is the row in the spreadsheet, whereas the ledger is the column in the spreadsheet. Our small business accountants in Melbourne CBD have detailed the differences between journal entries, ledgers and trial balances below.
Our small business accountant in Melbourne defines journal entries as a chronological order of transactions that form the reasoning to support transactions. When a transaction is recorded in the journal, it has been journalised. Then when the information has been copied and transferred to the ledger, this means posting has occurred.
Ledgers are a collection of accounts and their balances, created by our small business accounting services in Melbourne. They are generally a collection of T- accounts for a business and contain both the activity and balances of all accounts. Companies seek within their ledger for the balances of their accounts.
These are a listing of accounts and their balances at a specific point in time. Trial balances serve many functions such as:
- Proving that total debt balances with total credit balances
- Summarises in one place all accounts of an entity and their respective balances
- Financial statements can be prepared from the balances
- Helps business owners make adjustments to account balances
For more information regarding formal accounting records, please contact our small business accountant in Melbourne today.