Accounting schedules: the other half of the books, beyond Dr and Cr

Hook

The eighth lesson covered double entry: a debit and a credit, and the two sides balance. A lot of people assume that once the entries are posted the books are done. Today, a line only people inside the trade know: the entries are only the skeleton — the schedules are the flesh. A set of books with no schedules is a skeleton that cannot hold itself up.

What a schedule is

Every figure on the statements should have a supporting table behind it — that is a schedule. The statement says "fixed assets, so many thousand" — the schedule tells you which assets, bought when, at what cost, how much depreciation and what net book value, the NBV, is left. The statement says "bank loan, so many thousand" — the schedule splits it out: how much principal is left, how much interest was paid. As the twenty-seventh lesson said, the bank shows one deduction and principal and interest have to be split by hand. Prepayments get a table: what was paid, spread over what period. Accruals get a table: what was estimated and on what basis. Stock gets a table: what goods, how many, at what cost. And the receivables and payables ageing from the sixth lesson is in fact the most commonly used schedule of all. In a line: the entry records how much, the schedule records how it got there.

What happens without them

Four scenes where it shows immediately. The audit arrives — an auditor does not just look at totals; for every figure they ask for a breakdown (the twenty-first lesson). With a schedule you hand it over the same day; without, you go back through the documents and rebuild it, burning time and audit fees together. The bank asks — "can we have a fixed asset breakdown?" Cannot produce it, and the loan process stalls. Next year's bookkeeping — the thirty-ninth lesson covered brought-forward balances: this year's schedules are the manual for next year's opening. Without them, next year's accountant stares at a single total. Changing accountant or system — with schedules a handover is a house move; without, it is archaeology, and that is precisely why so many incoming accountants would rather redo everything.

The basis of estimation

Schedules hold something even more valuable: the basis of estimation. Some figures in the books do not come from a document, they are estimated. Depreciation — how many years is the asset expected to last? Month-end electricity — the bill has not arrived, so how much is accrued (the accruals from the sixth lesson)? Bad debts — which receivables may not be collected, and how much is provided? Shared cost allocation — the rules from the tenth lesson, spread on what proportion? Estimating is allowed; estimating carelessly is not. For every estimate, the schedule should record three things: what method, what rate, and why. Two benefits: when the auditor asks how the figure was arrived at, you can answer; and when the books are done next year, the same ruler is used — consistent, so the figures stay comparable.

What a good schedule looks like

Nothing fancy is needed, just four standards. One, every balance sheet figure has a table. Two, the table's total agrees to the statements — if it does not agree, it is not a schedule. Three, it rolls forward year on year — last year's table is carried into this year and updated, not reinvented annually. Four, it is kept somewhere it can be found; the filing discipline from the fifteenth lesson applies to schedules too. As for LTT's approach, the thirty-third lesson set out our values: tabulate, analyse and lay it out so it can be read at a glance. What we hand a client is not a pile of entries, it is a readable set of schedules.

To close

Remember this line: the mark of finished books is not that the entries are posted, it is that the schedules are complete. Dr and Cr make the books balance; schedules make them stand up, explain themselves and pass on to the next person. Does every figure behind your statements have a table? Grab a coffee first and talk about your business. For the accounting, come to LTT. I am LTT, helping SME bosses get their accounts straight. Follow us, and see you next time.