Financial transactions and reports involve monitoring and analysis of the flow of cash through your business. This can include transactions that occur within the company, such as purchases, payroll and expense reports; and externally, like rentals and sales of assets; or credit-related transactions (e.g., loans or revolving credit, cash advances). It is essential to examine financial transactions in order to ensure that your accounting records are accurate and reliable. This requires clear definitions and processes, as well a consistent, regular update.
Internal transactions are those which occur within a firm, such as the purchase, sale and leasing of office space. These transactions are also referred as non-cash due to the fact that they do not involve the exchange of products or services for cash. They may include social responsibility and donations spending, in addition to other expenses such as travel and PCard fees.
The financial system of record tracks all cash and non-cash transactions. This can be anything from a simple accounting program to an Enterprise Resource Planning (ERP). A reliable financial statement depends on the policies and procedures that ensure that only those transactions are recorded in the system which can be verified using independent evidence, like source documentation like www.boardroomplace.org/benefits-of-succession-planning sales orders, purchase receipts invoices, cancelled cheques, promissory note statements, bank statements and appraisal reports.
To confirm the authenticity of a transaction, you have to first determine the accounts involved and then determine the account where the transaction will be debited or credited. For instance, suppose that your business received $5,000 in revenue due to consulting services. To record the sale you must identify the income account as well as the accounts receivables account. You must verify that both are growing and follow the rules for debiting and crediting. To complete the procedure, you should then note the transaction in your journal entry.
