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Improve Your Bookkeeping System

Although you might make use of a single-entry bookkeeping system, double-entry bookkeeping is the usual method of keeping business records.

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The bookkeeper (most likely you, for your first few years in business) enters transactions first in a journal, and then posts monthly totals to the appropriate ledger accounts. Five categories of ledger accounts are: 1) income; 2) expense; 3) assets; 4) liability; and 5) net worth. Income and expense accounts are closed each year; assets, liability and net worth accounts are maintained on a permanent and continuous basis.

Excerpted from Starting a Home-based Business