Information from your accounting journal and your general ledger is used in the preparation of your business’s financial statements: the income statement, the statement of retained earnings, the balance sheet, and the statement of cash flows. Information from the previous statement is used to develop the next.
One way to make sure your year-end goes smoothly is to keep an eye on your balance sheet accounts all year long. What do I mean by that?
At yearend, your bookkeeper or internal accountant will (or should) go through every account on your balance sheet and tie it to a third party source document. You can reduce your year-end preparation costs if you submit a clean set of books.