Financial transactions and reporting involves monitoring and analyzing flow of money through your business. These could be the transactions that occur internally, such purchases or payroll and expense reports; externally, such as sales and rental of assets, or credit-related transactions (e.g. loans or revolving credit, cash advances). Analysis of financial transactions is crucial to ensuring that your accounting records are accurate and reliable. This requires clear definitions and processes as well as a consistent and regular update.
Internal transactions are those which occur within a business for example, such as purchases, sales, and the rental of office space. These are also known as non-cash transactions due to the fact that they don’t involve the trading of goods or services in exchange for cash. These transactions can include social responsibility and donations, along with other expenses such as PCard charges and travel expenses.
Non-cash and cash transactions are recorded in the http://www.boardroomplace.org/board-management-system-online-solutions-to-choose/ financial system of record, which may be anything from a simple accounting software program to a more sophisticated Enterprise Resource Planning (ERP) system. A solid financial statement is based on policies and procedures that ensure that only transactions that can be independently verified are recorded in the system. These include source documentation such as sales orders, receipts for purchase invoices, purchase invoices cancelled check, bank statements, promissory note and appraisal reports.
To verify 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 example, suppose your company earns $5,000 in revenue from consulting services. To record the sale, you must identify the income account as well as the account receivables; determine that both are growing and then follow the rules of debiting and crediting. You must enter the transaction in your journal entry to complete the process.