A lot of preparatory work is done before the preparation of the annual financial statements. At the end of the reporting period, all operational accounts are closed, the correctness of entries on synthetic and analytical accounts is checked, an inventory of property and liabilities is carried out, and order journals and the general ledger are closed.
Instructions
Step 1
The general ledger is opened annually. Each line of the book corresponds to a specific month, each account has its own spread. Credit turnovers are transferred to the general ledger every month with a breakdown of debit accounts. In addition, it records the total debit turnovers. After all the amounts have been entered, they check that the turnovers on debit and credit are the same. If the equality is violated, you should look for an error in the transfer of data from order journals or records in them.
Step 2
After checking the data, the debit and credit balances are displayed for all accounts. However, remember that active accounts have a debit balance. It is calculated as the sum of the opening debit balance and the debit turnover, then the credit turnover is deducted from it. Passive accounts have a credit balance. It is found as follows: the balance on the loan at the beginning of the month plus the loan turnover minus the debit turnover.
Step 3
In addition to the equality of turnovers, when filling out the general ledger, equality of accounts must be observed, i.e. the total balance of all debit accounts must be equal to the total credit balance of the accounts. If this equality is observed, the existing credit and debit balances are transferred to the balance sheet.
Step 4
Information from order journals is transferred to the general ledger starting from the credit turnover, i.e. first, the total of turnovers on the credit of the journal-order is recorded in the column "Turnover on credit". These amounts are written out separately, and as there are records of individual amounts in the debit of accounts corresponding to the credit of the account indicated in the order journal, they are gradually deducted. This filling procedure makes it possible to monitor the correctness of entries on accounts in the general ledger, since the amount reflected in the credit of one account must necessarily be equal to the amounts in the debit of the corresponding accounts.
