What is zero-proof bookkeeping?
Posted entries are methodically deducted from an ending balance in manual bookkeeping, known as “zero-proof bookkeeping,” used in accounting to check for mistakes. When all inputs have been removed, a ratio of zero in zero-proof bookkeeping indicates that the accounting entries were accurately recorded. Maintaining a balance sheet, a typical financial statement released by businesses that balance assets, liabilities, and shareholder equity such that subtracting the left side from the right side of the balance sheet yields a total of zero, is akin to this approach.
Zero-proof accounting is used in a double-entry bookkeeping system, where credits (liabilities) and debits (assets) are tracked concurrently.
Recognizing Zero-Proof Accounting
Accounting discrepancies may be reconciled using this technique, which is a component of double-entry bookkeeping systems when there aren’t a lot of entries or transactions. Bank tellers often use zero-proof accounting to settle discrepancies at the end of the day. Zero-proof accounting is not feasible when a high volume of transactions and rounded values are the norm. For this reason, smaller companies or individuals are the ones that use this technique the most.
Since zero-proof accounting is manual, it is tedious and time-consuming. It is also laborious since the same kinds of manual computations must be done again, such as after each workday. Of course, spreadsheet programs like Microsoft Excel or calculators may be used to supplement this job.
The bookkeeper will begin zeroing out, starting with “footing” the ledger. In this case, the footing refers to adding up all of the figures listed in a single accounting ledger column. By comparing and deducting debits from credits, the resultant total—which shows at the bottom, or “foot” of the column—is then used to reconcile against the other columns (cross-footing). An example of zero-proof accounting is using balance sheets by businesses where shareholders’ equity is utilized as a number (positive or negative) to balance assets with liabilities such that they add up to zero on the net.
