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Financial Transactions and Reporting
Financial transactions and reporting is the process of monitoring and analyzing the flow of money through your business. This may include internal transactions, for example payroll and expense reports, as well as external transactions like rental or sales of assets, as well as credit-related transactions. Financial transaction analysis is critical to ensure that your accounting records are accurate and reliable. This requires clear definitions and processes and a consistent and regular update.
Internal transactions are those which take place within a company like the purchase, sale and leasing of office space. These transactions are also referred to as non-cash because they do not require the exchange of items or services in exchange for cash. These transactions could include social responsibility and donations as well as other expenses, such as PCard and travel costs.
The financial system of record keeps track of all cash and non-cash transactions. This can be anything from a simple accounting program to an Enterprise Resource Planning (ERP). A sound financial statement relies on procedures and policies that ensure that only those transactions are recorded in the system that can be verified with independent evidence, like evidence from the source like sales orders, purchase receipts, invoices, cancelled checks, bank statements, promissory notes and appraisal reports.
To confirm the accuracy of a transaction, it is necessary to first identify the accounts involved and then determine the account where the transaction will be debited or credit. For instance, suppose that your company earned the sum of $5,000 from consulting services. To record the sale, you must identify the income account and the accounts receivables account. You must verify that both are growing and apply the rules for crediting and debiting. You must add the transaction into your journal entry to complete the process.