Posted in Finance, Accounting and Economics Terms, Total Reads: 344
Definition: Zero-Proof Bookkeeping
Zero proof bookkeeping is a manual procedure of book keeping. Here, the accountant goes in the reverse direction and keeps subtracting all entries, one by one, from the balance. If the value after these steps is zero means the calculations and entries were correct.
This method is used in the smaller businesses. This method of keeping an eye on the books allows the accounts to have a zero balance at the end of the financial year. This method can be used in reconciling the accounting differences in the situations where there are not very large no. of the transactions or the entries are happening. It is not practical to use this method when there are the large numbers of the transactions are happening & most of the figures are rounded off. Then the balance will not match to zero exactly.
Example: A typical situation where this method is used is by the bank tellers to reconcile the differences because of the posting errors at the end of a day. It is also known as a teller’s difference.
This method is on the verge of being outdated. Since most of the businesses as well as personal entries are also done on the computers. It is very convenient to do the entries on the computers. The balances are also automatically verified. So, the manpower as well as the time is saved. So, few years down the line, it is highly probable that this method will no longer exist.