Importance of accounting records in company

Importance of accounting records
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The accounting records are those documents necessary for constant control of the business. They allow the entrepreneur to manage rationally. At the same time, they protect the interests of third parties who are in contact with the company. Their keeping is not mandatory for small entrepreneurs, social enterprises and agricultural entrepreneurs. By reading this short tutorial you can have correct information on accounting records in a company. Here then are all the necessary information.

Importance of accounting records in company

Accounting records are like the memory of a company. Through them, you can know for sure the profit and loss statement of any company, since simply the numbers never lie, and what better way than to keep everything up to date by hiring professionals in the sector?

Importance of accounting records

Guarantee profitability

Accounting records are so vital for organizations that it is possible to determine whether a company is profitable or not, as well as how much money comes in and goes out and the possible debts that may be had.

They are much more necessary in service companies that handle a constant billing of economic resources since they are the ones that will allow generating financial reports and establishing growth projections.

Key to success

The accounting records are an x-ray of the financial situation of the company. These are the ones that show the team what the situation is and what mechanisms should be applied to maintain the good behavior of the company or, on the contrary, take the necessary corrections.

All the information kept in these accounting records comes from the different transactions carried out by the company, which must be recorded and supported in an adequate way to be used when necessary.

Then it will be the accounting team of the company which establishes the mechanisms that must be implemented based on the behavior observed through these records.

The leading role of billing

If a company does not know how much money it invoices, it will not be able to know how much capital it has and it will not be able to take care of its liabilities either. This is a true chain that begins with a simple record and ends with the company’s balance.

Although in many cases, this procedure can go unnoticed, it offers less importance than it has. The truth is that many processes depend on billing that can benefit or deteriorate the company.

This small document that serves as proof of the transaction carried out is actual proof that can show a large amount of data, all of them necessary for accounting records, such as identifying the buyer and the seller.

It also records the service provided, the object purchased or whatever the case may be, and the amount paid for said activity. Everything should always be as clear and precise as possible.

Importance within the financial organization

Most companies move their inventories either of final products or raw materials based on credit, as this system allows them always to have their products available.

In these cases, the invoicing is the one who records the assets and liabilities that the creditor has as the seller. Regardless of the activity in which the company operates, the invoice will be beneficial and highly necessary for both parties within any economic and financial operation.

Evolution of the billing process

Previously, the invoicing of any company or business was done manually. However, this has been changing and improving over time thanks to the evolution of technology.

For example, and thanks to the printing companies, invoice books were established that were perfectly identified with the fiscal and social data of the companies, then a much greater leap was made and this entire process was automated with the implementation of different specialized software in this field.

Software for invoicing

Currently, in the market, you can get a wide variety of specialized software in this area. However, there will always be suitable for the branch in which the company or company in question operates.

Just as there are a variety of program options, there are also providers. Each of them can use different software that offers significant advantages and alternatives that favor the company’s growth and take advantage of its potentialities.

You will need for accounting records:

  • Journal book
  • Ledger
  • Inventory book

The journal is one of the mandatory documents by law, both civil and fiscal. It is the collection of the external management operations of the company represented with the double-entry accounting procedure. It must be done according to the chronological order of manifestation. It is important to know that every single management operation must be represented in its individuality. The only companies that can fail in the analytical representation are the banks. The latter in fact have rules such that the analytical survey system is in fact replaced by the synthetic survey. That is, they are represented cumulatively.

Inventory book

It must be drawn up the first time at the establishment of the company and subsequently at the end of each administrative period. It must not have whitespace, leading and border transports. If you need to make some cancellations, it must be done in such a way that what has been deleted is legible. Furthermore, the pages must be numbered progressively for each annuity. The inventory book is not subject to initial endorsement. It consists of an analytical and a synthetic part. The first contains the indication and valuation of assets and liabilities. While the synthetic part contains the financial statements (Balance Sheet, Income Statement and Explanatory Notes).

Ledger

It is an accounting register in which all the accounts (mastrini) involved in the management of the activity are collected, that is, the incoming and outgoing goods. The book consists of two columns “Dare and Avere”. They systematically report all business management operations. Unlike the journal where business operations must be filled in chronologically, the ledger summarizes the situation of each account. This register must be kept for 10 years, starting from the last survey. This must be done even if the company has gone out of business, for the purposes of any tax assessments.

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