Bookkeeping guides

Every guide

How to do a bank reconciliation step by step

A bank reconciliation explains the gap between the cash book and the bank statement. The steps in order, a worked example and rooms to practise in.

Debits and credits explained: which side is which

Debit is the left side of an account and credit is the right. Which side each kind of account goes up on, a worked example and rooms to practise in.

How to balance a T-account: balance c/d and b/d

Add up each side of the account, carry the difference down on the smaller side and bring it down on the opposite side. The steps, with a worked example.

How to prepare a trial balance step by step

List every account balance in the debit or the credit column and add up both. The steps, a worked example, and what an agreed trial balance proves.

Trial balance does not balance: how to find the error

Work out the difference, then check the adding, the columns, the figures copied and the entries, in that order. Plus the errors a trial balance cannot show.

How to write up and post a sales day book

From invoice to day book to the ledgers: one line for each invoice, three totals to the general ledger, and each invoice to its customer's account.

How to write up and balance a cash book

Receipts on the debit side, payments on the credit side, then the balance carried down. How to write up a cash book and where it sits in the double entry.

How petty cash works: the imprest system step by step

Petty cash under the imprest system: a fixed float, a voucher for every payment and a top-up equal to what was spent. The steps, with a worked example.

Invoice, credit note and statement: what each one does

An invoice adds to what a customer owes, a credit note takes away from it and a statement lists both. What each document is and what it changes.

Trade discount and prompt payment discount: the difference

A trade discount comes off the list price on the invoice. A prompt payment discount is earned by paying early. Where each one appears in the books.

How to reconcile a sales ledger control account

Add up every customer's balance, compare the total with the sales ledger control account and trace the difference. The steps, with a worked example.

How to write a journal entry, with the narrative

When the journal is used, how an entry is laid out and what the narrative must say. The steps in order, with three worked journal entries.

How to use a suspense account: opening and clearing it

A suspense account holds the difference when a trial balance does not agree. How to open it, which errors go through it and how to clear it to nil.

How VAT works: input tax and output tax

Output tax is the VAT on sales and input tax is the VAT on purchases. How the difference reaches HMRC, the entries in the VAT account and a worked example.

How to fill in a VAT return from the books

What each of the nine boxes of a VAT return holds, which day book or cash book column each figure comes from, and a whole return worked from the books.

How to read a payslip, line by line

Gross pay, each deduction by name, net pay and the details at the top of a payslip: what every line means, a worked example and how to check yours.

Accruals and prepayments explained, with the journals

An accrual adds a cost used but not yet paid. A prepayment takes out a cost paid but not yet used. The year-end journal for each, with worked examples.

Straight line and reducing balance depreciation explained

How to work out depreciation by the straight line and reducing balance methods, the year-end journal and the carrying amount, with a worked example of each.

How to work out cost of sales and gross profit

Cost of sales is opening inventory, plus purchases, less closing inventory. Where returns and carriage go, the steps in order and a worked example.

How to read a statement of profit or loss

The steps from revenue to profit for the year: cost of sales, gross profit and expenses, what stays out of the statement, and a worked example.

How to read a statement of financial position

Non-current and current assets, current and non-current liabilities, net assets and capital: what each heading holds, the steps and a worked example.

Fixed and variable costs, contribution and break-even

How fixed and variable costs behave, what contribution is, and how to find the break-even point in units and in pounds, with a worked example.

What records a sole trader should keep, and how

Keep business money apart, keep the proof behind every figure, and keep one simple list of income and expenses. The steps and a worked month.

Spreadsheet formulas for bookkeeping: SUM, IF and lookups

SUM totals a column, IF makes a cell decide and a lookup fetches a detail from a list. What each does in the books, with a worked invoice list.

Margin and mark-up explained, with a worked example

Mark-up is profit as a percentage of cost. Margin is the same profit as a percentage of the selling price. How to work out each and how to price for each.