Advanced Bookkeeping Techniques

Take your bookkeeping skills to the next level with these accounting-based strategies for managing financial entries.

Introduction

• Advancing your bookkeeping skills

1. Review of Debits and Credits

• Two things to remember for debits and credits
• Journal entries: Receiving financing from owners and lenders
• Journal entries: Buying assets and repaying loans
• Journal entries: Recording revenues and expenses

2. Adjusting Entries: Prepaid Expenses and Unearned Revenue

• Accrual accounting: Net income vs. cash flow
• Fix the balance sheet, then fix the income statement
• Recording the paying for and then use of prepaid expenses
• Recording the receipt of and earning of unearned revenue

3. Adjusting Entries: Unrecorded Liabilities, Unrecorded Assets, and End-of-Period Estimates

• The matching principle
• Recording expenses with liabilities that slowly build up
• Recording revenue with assets that slowly build up
• End-of-period estimates such as depreciation and bad debts

4. Closing Entries

• What are retained earnings?
• The difference between a real and a nominal account
• Updating retained earnings and resetting nominal accounts
• Practice with the debits and credits of closing entries

5. Posting, Trial Balance, and Financial Statements

• The important raw data in the trial balance
• Posting the journal entries to the ledger accounts
• Creating a trial balance
• Using a trial balance to prepare a balance sheet

6. Correction of Errors

• Accounting restatements: The case of Groupon
• Error correction: Recording something in the wrong account
• Error correction: Increasing or decreasing the amount
• Error correction: Fixing an error made last year

Conclusion

• The role of external auditors in the accounting cycle