Step-by-step

Operations

First, we need to understand the operations. Here are five examples of operation that we will use throughout the process.

Operation 1 - 01/01/22, Purchase of a laptop, 10000$, 20% tax, by card, invoice n.1

Operation 2 - 02/01/22, Selling my products, 100000$, 15% tax, customer will pay in 2 months, invoice n.2

Operation 3 - 03/03/22, Payment of wages, 20000$, by bank transfer, transfer n.1

Operation 4 - 06/03/22, Owner put its own money in the company's bank, 2000$, transfer n.2

Operation 5 - 10/05/22, Cash withdrawal, 400$, withdrawal n.1

Understanding the operation

From the operation, we need to have the following informations mandatory for our recording book:

• Date
• Classes
• Amounts
• Proof document
• Types (credit/debit)

All these informations can be extracted from each operation:

Identifying classes

Now that we know which parts of the operation can help us identify the classes, we can try and find the closest account number that fits our operation.

Identifying the types

With all the account numbers and names figured out, we now have to decide if a specific account is debit or credit. To do so, we use the rule:

Recording Book

With all the information we got from the operation analysis, we can fill in our operation in our recording books. The most important rule is to always start with THE DEBIT ACCOUNT.

We can clearly see that totals for debit and credit are the same, which means that we CORRECTLY entered all our operation.

Ledger Book

Since now we have all the information for all operations, we can classify our balances in terms of accounts. For the Ledger book, we:

• Separate each account
• Separate debit and credit
• Calculate the difference to find the balance
  • ON THE LEFT SIDE: "C.B." : if credit is larger than debit (credit > debit)
  • ON THE RIGHT SIDE: "D.B." : if debit is larger than debit (credit < debit)

Step by step

Final Ledger Book