Financial Transactions and Reporting
Financial transactions and reports involve monitoring and studying the flow of money through your company. This can include transactions that take place internally, such as purchases, payroll and expense reports, as well as externally such as sales and rental of assets; or credit-related transactions (e.g. loans, revolving credit, cash advances). Financial transaction analysis is critical to ensure that your accounting records are accurate and reliable. This requires clear definitions, processes and policies and regular, regular updating.
Internal transactions are those which occur within a firm like the purchase, sale and leasing of office space. These transactions are also referred to as non-cash, since they don’t involve the exchange of goods or services in return in exchange for cash. They could also include donations and social responsibility spending, in addition to other expenses like travel or PCard charges.
Cash and non-cash transactions are recorded in the financial system of record, which could vary from a basic accounting software application to a sophisticated Enterprise Resource Planning (ERP) system. A solid financial statement is based on the policies and procedures used to ensure that only the transactions are recorded in the system which can be verified using tangible evidence, such as documents from the source, such as sales orders, purchase receipts invoices, cancelled cheques, promissory note statements, bank statements and appraisal reports.
To confirm the validity of the transaction, you need to first determine the accounts involved and determine the place where it will be debited and credit. For instance, suppose that your company earns $5,000 in revenues from consulting services. To keep track of the sale, you must identify both the income account and the account receivables; confirm that both are growing; and apply the rules of crediting and debiting. You must enter the transaction in advantages of succession planning your journal entry to complete the process.