Financial Transactions and Reporting

Financial transactions and reporting is the process of tracking and analysis of the flow of cash through your company. This could include transactions that happen internally, such purchases and payroll reports; as well as externally, such as sales and rental of assets; and credit-related transactions (e.g. loans or revolving credit, cash advances). It is important to analyze financial transactions to ensure that your accounting records remain accurate and reliable. This requires clear definitions, procedures and policies as well as regular, consistent updates.

Internal transactions are those that read this happen within a company for example, such as purchases, sales and rent of office space. They are also known as non-cash transactions since they don’t involve trading of services or goods for cash. They may include donations and social responsibility spending, in addition to other expenses like travel and PCard fees.

The financial system of record keeps track of all cash and non-cash transactions. It can range from a simple accounting software to an Enterprise Resource Planning (ERP). A sound financial statement relies on procedures and policies that ensure that only the transactions are recorded in the system that can be verified with objective evidence, such as sources of documentation such as purchase receipts, sales orders invoices, cancelled checks bank statements, promissory notes and appraisal reports.

To verify the accuracy of the transaction, you need to first identify the accounts involved, and determine the location where it will be debited and credited. For instance, suppose your business earns $5,000 revenues from consulting services. To record the sale you must identify the income account and the receivables accounts, confirm that both are increasing and apply the rules for crediting and debiting. The transaction must be recorded in your journal entry to complete the process.