Financial transactions and reporting entails tracking and analyzing the flow of money through your company. This could include internal transactions, for example expense and payroll reports, as well as external transactions like rentals or sales of assets, and credit-related transactions. It is important to analyze financial transactions in order to ensure that your accounting records are accurate and reliable. This requires clear definitions, policies and processes, as well as regular, consistent updating.
Internal transactions are those that occur within a firm, such as the purchase, sale or rental of office space. These are also known as non-cash transactions since they don’t involve trading of goods or services in exchange for cash. These transactions could include social responsibility and donations and other expenses, such as PCard charges and travel expenses.
The financial system of record tracks all cash and non-cash transactions. This can be anything from a simple accounting package to an Enterprise Resource Planning (ERP). A dependable financial statement is based on the policies and procedures that ensure that only those transactions are recorded in the system that can be verified with the aid of objective evidence, for example evidence from the source like purchase receipts, sales orders invoices, cancelled cheques, promissory note statements, bank statements and appraisal reports.
To confirm the validity of a transaction, it is necessary to first determine the accounts involved and determine the location where it will be debited and credited. Let’s say, for instance, that your company earned $55,000 in revenue from consulting services. To note the sale, it is necessary to must identify the income account as well as the account receivables; verify that both are growing and follow the guidelines of crediting and debiting. To complete the process, you need to then record the transaction in your journal entry.