While starting final accounts/year-end accounts, we need to prepare ETB or Extended Trial Balance for the user to get better understanding of the accounts.
An extended trial balance is a standard trial balance to which are added columns extending to the right, and in which are listed the following categories:
Initial balances per general ledger/bookkeeping software. These are the account totals as of the end of the accounting period, as compiled from the general ledger. The total of all initial balance debits should equal the total of all initial balance credits.
Adjusting journal entries. These journal entries more closely align the reported results and financial position of a business to meet the requirements of an accounting framework, such as GAAP or IFRS. This generally involves the matching of revenues to expenses under the matching principle, and so impacts reported revenue and expense levels.
Income statement balances. These are the revenue, expense, gain, and loss accounts used to create the income statement.
Balance sheet balances. These are the asset, liability, and equity accounts used to create the balance sheet.
In all of the above columns, debit and credit amounts are listed in separate columns. Thus, there are eight columns in total, with two columns assigned to each of the preceding categories.
A variation on the format of the extended trial balance is, to begin with, initial balances, add or subtract adjusting journal entries, and finish with ending balances. This approach does not separate the ending balances into the income statement and balance sheet accounts, providing somewhat less information to the reader; this is acceptable if the reader is not attempting to create an income statement or balance sheet from the trial balance.
The extended trial balance is beneficial for creating a visual representation of where each of the accounts in the standard trial balance goes in the financial statements, which yields revenues, expenses, and profits for the accounting period, as well as assets, liability, and equity totals as of the end of the period. Any computerized accounting system automatically generates financial statements from the trial balance, so the extended trial balance is not a commonly caused report in computerized systems.
The reason for ETB is, of course, to get a visual representation and to know that the final reports will match the final ETB.
As a beginner, you might be overwhelmed with the linking part but try to divide segments into P&L and Balance Sheet and later on to Income, Expense, CA, CL, NCA, and NCL.
This will help you simplify each and use the coloring method for yourself to know which of the accounts are pending reconciliation and which are completed.
Look at demo jobs for starters to get a better understanding of this.