Notes on real books and AI
Double-entry bookkeeping, audit-ready business records, and running your books with an AI assistant.
A period you can still edit is not closed
Locking a period is what makes a reported number mean something. Everything found afterwards is a correction posted forward — visible, dated, and leaving the original in place.
Inventory is an asset until it sells, and then it is a cost
Buying stock does not reduce profit. Selling it does. Getting that timing wrong is why a busy month can look unprofitable and a quiet one can look excellent.
The Canadian filing calendar a small company actually has
Source deductions, sales tax, information slips and the corporate return run on four different clocks set by four different rules. Here is the shape of the year.
Accruals and prepayments, and the reversal that stops the double count
Adjusting entries are where a cash-shaped ledger becomes an accrual one. They are also where the same cost gets counted twice, because the adjustment was never reversed.
When the control account stops agreeing with the subledger
Accounts receivable should always equal the sum of unpaid invoices. When it does not, someone posted a journal straight to the control account — and that is worth finding.
Your payroll liability accounts should have a shape
Each payroll liability has a predictable rhythm. A balance that does not fit the rhythm is the cheapest error you will ever find — and the one most often found by the CRA instead.
Capitalise or expense, and why your books and your tax return disagree
Buying equipment creates two separate calculations that will never match — book depreciation and capital cost allowance. Keeping them separate is the whole job.
Three statements, three different questions
The P&L, the balance sheet and the cash flow statement are not three views of the same number. Each answers a question the others cannot, which is why a profitable business can run out of money.
Procure to pay — the controls that stop you paying twice
The purchasing chain is where small companies lose the most money to simple error: duplicate payments, prices nobody agreed to, and suppliers who were never really suppliers.
What your books have to prove, and for how long
An audit trail is not paperwork. It is the difference between a number you can defend and a number you are asserting — and the retention rules run longer than most people assume.
Order to cash — what happens between the sale and the money
Invoicing is one step in a chain that ends with cash and a closed receivable. The steps in between are where revenue quietly goes missing.
Segregation of duties when there are three of you
The textbook control assumes enough people to separate every function. Small companies cannot. Here is what to separate first, and what to substitute when you cannot separate anything.
Clear books. A clearer head.
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