FIVE STEP Bookkeeping
Bookkeeping for Tax Accounting is a simple FIVE STEP PROCESS:
- Review Prior Work
- Record Transactions "Accurately"
- Categorize Transactions
- Review the Income Statement
- Review the Balance Sheet
Below is a Procedural Schematic of this process which includes references to ALL of the data relationships in this very simple solution.
Step 1 - Review Prior Work
Step 2 - Record Transactions "Accurately"
Step 3 - Categorize Transactions
We have something far better than "memorized transactions".
Sort your journal by Payee. Similar Payees are now grouped together and you can drag categories to all transactions that apply with a single move of the mouse.
There is no faster way to do this.
The power of the spreadsheet is really on display here. The time savings is startling.
The transaction categories flow in real time from Journals to our "Transaction Aggregator" and on to the "General Ledger" without the potential for data loss or corruption of a database system.
If the Balance Sheet is turned on, you can watch updates affect it in real time.
Step 4 - Review the Income Statement
The Income Statement is created from the General Ledger Records. The General Ledger has debit and credit cross check reporting that can be run for all time periods or time period subsets to ensure integrity. The important thing to understand here is there was/is no 'hand off' of records. All this data resides in the Journals and has simply been repurposed for this reporting. Thus the idea of "computer error" is generally non-existent.
Step 5 - Review the Balance Sheet
We take a slightly different approach to the Balance Sheet.
There are no "sub reports" related to equity or Net Income. All of those values are presented directly on the Incremental Portion of the Balance Sheet for Transparency.
Given this data is all created from the General Ledger, which is created from raw data in Journals with only a change in perspective, nothing can be lost. A change in a Journal is reflected here immediately. Stepping through a balance sheet by day to find errors is simple work.
A months worth of Credit Card Transactions can flow through the process in 5 minutes. Ten minutes if you are getting side tracked.
The same for a checking account... Video coming soon...