Financial Transactions and Reporting
Financial transactions and reporting entail monitoring and analyzing the flow of money through your company. This can include transactions that happen internally, such purchases, payroll and expense reports; as well as externally, like rental and sales of assets, or credit-related transactions (e.g. loans or revolving credit, cash advances). Analysis of financial transactions is vital to ensure that your accounting records are accurate and reliable. This requires clear definitions and procedures and a consistent regularly updated.
Internal transactions are those that occur within a business for example, such as the purchase, sale or rental of office space. These transactions are also referred to as non-cash due to the fact that they do not involve exchange of products or services for cash. They could also include social responsibility and donations spending, in addition to other expenses, such as travel and PCard charges.
Non-cash and cash transactions are recorded in the financial system of record. This can vary from a basic accounting software application to a more sophisticated Enterprise Resource Planning (ERP) system. A reliable financial statement is dependent on the policies and procedures that ensure that only transactions that can be verified objectively are recorded in the system. These include source documentation like sales orders, receipts, purchase invoices bank statements, cancelled checks as well as appraisal and promissory note reports.
To verify the accuracy of a transaction, it is necessary to first determine the accounts involved and determine the place where it will be debited and credit. Suppose, for example, that your business received $5,000 in revenue as a result of consulting services. To record the sale, you must identify the income account and the accounts receivables and accounts receivables accounts. confirm that both are increasing and apply the rules for debiting and credits. You must record the transaction in your journal entry to complete the process.