## 7 BFS Architecture Components
### Key Smart Contracts
It is facilitated through accounting smart contracts designed to enhance efficiency and reduce errors, making the whole process more streamlined and reliable. These accounting smart contracts define the accounting rules that govern the transformation of economic data produced by business transactions into accounting data. This process ensures adherence to a set of rules for recognising which financial accounts will be impacted by each business transaction. 3. _Recording Transactions in a General Journal._ After identification, the transformed data from business transactions are recorded chronologically as journal entries in the company's books, starting with the general journal (GJ). 4. _Posting Transactions to the General Ledger._ Entries from the GJ are then posted to the general ledger (GL), a master record that provides a complete overview of all financial accounts and the evolution of their values. 5. _Generating Entries for the Running Trial Balance._ At the end of the accounting period (continuously or on demand), the final balances from the general ledger are automatically calculated, ensuring accuracy and reducing the potential for errors or manipulations. Only these final balances are posted to the running trial balance, clarifying details from the GL account. This step is necessary to ensure that debits equal credits, essential for analysis, error identification, and corrections to ensure the accuracy of financial records before financial statement preparation. The resulting final trial balance is used to construct the financial statements--the end product of the accounting reporting. 6. _Generating Financial Statements._ Adapting this step to the BFS system's architecture involves automating the generation of the final balance sheet from the finalised running trial balance. The balance sheet is a critical financial statement summarising a company's financial position at a specific point in time, detailing assets, liabilities, and shareholders' equity. By automating the generation of the balance sheet, the BFS system ensures accuracy and reduces the potential for human error, facilitating a more efficient and reliable financial reporting process. 7. _Publishing the Financial Statements on Blockchain._ The penultimate step in the BFS system's accounting cycle is the publication of the balance sheet in the blockchain financial statement data structure, referred to as the filing history of the BFS system. This integration into the blockchain ledger secures the financial information against unauthorised alterations and enhances the auditability of financial statements. By leveraging blockchain's inherent properties of immutability and transparency, this step ensures that financial data are readily verifiable and accessible, thereby providing confidence among stakeholders and regulatory bodies. 8. _Closing the Books._ Finally, temporary accounts are closed out to permanent accounts, like retained earnings, and the company prepares for the next accounting cycle. The adaptation of traditional accounting cycles to incorporate blockchain technology into the BFS system addresses several critical problems within financial reporting and management. This innovative approach solves issues related to accounting fraud, data manipulation, and the timeliness and reliability of financial data. By leveraging blockchain's inherent properties of immutability, transparency, and security, the BFS system ensures that all financial transactions are accurately recorded, processed, and verified in real time or on demand. This enhances the integrity and trustworthiness of financial statements and facilitates a more efficient and transparent audit process. Consequently, the adaptation contributes to a more stable, secure, and equitable economic ecosystem, where stakeholders can confidently rely on the financial information presented, fostering a higher degree of accountability and trust among all parties involved.