How to Use an Account Book

According to the Business Dictionary, account books are merely another name for books of account, which are journals, ledgers and other classified records comprising a firm's set of accounts. Such books serve several purposes that help a business operate smoothly and function successfully. In fact, account books are one of the most important aspects of a business, and their maintenance and reference is essential to the company.

Use an account book known as a journal to record corresponding transactions. A "Cash" account book would document each cash transaction, and an "Accounts Receivable" account would document each debt owed by a client to the company.

Refer to an account book to post transactions to a corresponding ledger. The general ledger contains the balances of the cash, assets, liabilities, expense and revenue accounts. Refer to journal account books to obtain the transactions to post to these accounts.

Obtain balances needed to create financial statements by referring to a ledger account book. The general ledger contains the balances of the accounts needed to generate balance sheets and income statements.

Determine business profits and losses, also known as the net income or net loss by referring to the balances of account books. Simply subtract the balance of the expense account from the balance of the revenue account and take into consideration any sales discounts or returns.

Implement account books in the investigation of unscrupulous business activities. Account books are useful in tracking business transactions, discovering errors and reporting any suspicious activities.

Tip

There are numerous types of account books, all of which serve special purposes, especially in accounting.

Warning

Beware of entering errors into account books that must be transposed to other account books, creating errors in more than one account book.

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Things Needed

  • Journals
  • Ledgers
  • Financial statements

About the Author

Kayla Lowe has been a freelance writer since 2008. She writes for various online publications and is also the author of the book "Maiden's Blush," a Christian-fiction romance novel. Lowe is pursuing a degree in elementary education.

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