Financial transactions and reporting involves monitoring and analyzing flow of money through your business. These could be the transactions that occur internally, such purchases or payroll and expense reports, as well as externally like rentals and sales of assets; or credit-related transactions (e.g. loans and revolving credit, as well as cash advances). Analyzing financial transactions is essential to ensuring that your accounting records are accurate and reliable. This requires clear definitions and procedures and a regular periodic update.
Internal transactions are those that take place within a company for example, such as the purchase, sale or rental of office space. These transactions are www.boardroomplace.org/board-management-system-online-solutions-to-choose also referred to as non-cash since they do not involve the exchange of items or services for cash. These transactions could include social responsibility and donations as well as other expenses like PCard and travel costs.
Cash and non-cash transactions are recorded in the financial system of record. This can be anything from a simple accounting software package to a sophisticated Enterprise Resource Planning (ERP) system. A sound financial statement relies on policies and procedures that ensure that only those transactions are recorded in the system which can be verified using objective evidence, such as evidence from the source like sales orders, purchase receipts, invoices, cancelled checks promissory note statements, bank statements and appraisal reports.
To confirm the authenticity of a transaction, you need to first identify the accounts that are involved and identify the account where the transaction will either be debited or credit. For instance, suppose that your business earned $5,000 in revenue from consulting services. To record the sale, you must identify both the income account and the receivables account; verify that both are growing; and apply the rules of debiting and crediting. To complete the process, you need to then note the transaction in your journal entry.
