Balancing the Books
Table of Contents:
Balance the Books to Double Check Expenses & Investments
So when you’re setting up all the accounts, in the end, you want all the numbers to make sense, known as balancing the books. For example, if you spend $500 (meaning -$500 in cash account and +$500 inventory account) in food and earned $800 from it. You’ll end up with a difference of $300, which should go in the earnings account. This is an extremely basic example, even for the smallest business, balancing the books becomes complex and time-consuming. To balance the books you need to have proper double-entry and a good account system set up. Otherwise, it’ll become too confusing to use.