Financial transactions and reporting involves tracking and analyzing money flow through your company. This could be internal transactions, such as expense and payroll reports, external transactions, such as sales or rental of assets, as well as credit-related transactions. Analysis of financial transactions is vital to ensuring that your accounting records are accurate and reliable. This requires clear definitions, procedures and policies, as well as regular, consistent updating.
Internal transactions are those which occur within a firm like the purchase, sale and rental of office space. These are also referred to as non-cash transactions due to the fact that they don’t involve trading of goods or services for cash. They can include donations and social responsibility spending, in addition to other expenses such as travel and PCard charges.
The financial system of record http://www.boardroomplace.org/benefits-of-succession-planning/ tracks all cash and non-cash transactions. It can range from a simple accounting software to an Enterprise Resource Planning (ERP). A dependable financial statement is based on procedures and policies that ensure that only those transactions are recorded in the system that can be verified with independent evidence, like sources of documentation such as purchase receipts, sales orders, invoices, cancelled checks, promissory note statements, bank statements and appraisal reports.
To verify the accuracy of a transaction, you must first determine the account involved and determine the place where it will be deducted and credited. For instance, suppose your business receives $5,000 in revenue from consulting services. To record the sale you must identify the income account as well as the receivables accounts, verify that both are growing and follow the rules for debiting and credits. You must add the transaction into your journal entry to complete the process.