Financial Transactions and Reporting
Financial reporting and transactions are the procedures of recording and transmitting financial information to different stakeholders, such as creditors, investors and regulatory authorities. This information is crucial for the development of a business as it informs decisions about investing, funding and other business-related activities.
It can be difficult to identify and classify transactions for financial reporting. However, there are ways to improve accuracy and streamline the process. Standardizing the method of identifying transactions streamlining workflows, and encouraging routine feedback will reduce the chance that debits or credit are missed or misclassified. A focus on the financial picture of the business could help ensure that accurate reporting is done.
There are many different types of financial transactions that could take place within a company. Some of the more common financial transactions include payments, receipts and purchases. Purchases are financial transactions that result in the business purchasing goods or services that it will later offer to customers. Receivables are financial transactions in which the business is compensated to provide goods or services to a different business. Payments are financial transactions that involve the company paying for services or goods that it has received from other businesses.
To properly record these financial transactions it is crucial to adhere to a set rules and regulations called Financial Reporting Standards. This group of rules includes Generally Accepted Accounting Principles, which are the principles that publicly-owned businesses in the United States must follow when producing their financial statements. International companies can apply the same set of rules referred to as International Financial Reporting Standards.
