Financial transactions and reporting is the process of monitoring and studying the flow of money through your company. This could include internal transactions, such as payroll and expense reports, as well as external transactions like rental or sales of assets, and credit-related transactions. It is crucial to review financial transactions to ensure that your accounting records are accurate and reliable. This requires clear definitions and procedures and a consistent periodic update.

Internal transactions are those which occur within a business for example, such as the purchase, sale or leasing of office space. These transactions are also referred as non-cash since they don’t involve the exchange of goods or services for cash. They could also include social responsibility spending, in addition to other expenses like travel and PCard charges.

Cash and non-cash transactions are recorded in the financial system of record, which can be anything from a simple accounting software application to a more sophisticated Enterprise Resource Planning (ERP) system. A solid financial statement is based on procedures and policies that ensure that only transactions board room place that can be verified objectively are recorded in the system. These include documentation from the source such as sales orders, receipts, purchase invoices bank statements, cancelled checks, promissory note and appraisal reports.

To verify an accurate transaction, it is necessary to first identify the accounts that are involved and then determine the account which the transaction will be debited or credited. Let’s say, for instance, that your business received $5,000 in revenue as a result of consulting services. To keep track of the sale, you must identify the income account as well as the receivables account; verify that both are growing; and apply the rules of crediting and debiting. The transaction must be recorded into your journal entry to complete the process.