Financial Transactions and Reporting
Financial transactions and reports involve tracking and analyzing money flow through your business. This can include transactions that occur internally, such purchases or payroll and expense reports; and externally, like rentals and sales of assets; and 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 regularly updated.
Internal transactions are those that occur within a firm for example, the purchase, sale or rental of office space. These transactions are also referred as non-cash because they do not involve exchange of products or services in exchange for cash. These transactions could include social responsibility and donations, and other expenses such as PCard and travel costs.
Non-cash and cash transactions are recorded in the financial system of record, which may range from a simple accounting software package to a more sophisticated Enterprise Resource Planning (ERP) system. A solid financial statement is based on the policies and procedures that ensure that only transactions that can be independently verified are recorded in the system. This includes source documentation such as sales orders receipts, purchase invoices, cancelled check, bank statements as well as appraisal and promissory note reports.
To confirm the legitimacy of an activity, you must first determine the account involved and identify the account from which it will be debited and credited. Let’s say, for instance, that your business made the sum of $5,000 through consulting services. To record the sale you must identify the income account as well as the accounts receivables account, verify that both are growing and follow the guidelines for crediting and debiting. To complete the process, you need to then enter the transaction into your journal entry.