advantages of succession planning
A financial transaction is a business-related event that involves at minimum two parties and impacts the finances of both parties. It causes at minimum one party to change the amount of money in its accounts (assets and liabilities). The timing of financial transactions could vary depending on whether an entity follows cash accounting or accrual guidelines. The choice of these accounting methods impacts the reporting and taxability.
Stakeholders depend on financial statements to evaluate the health of a company and their investments, which include loans and shares. All entities must ensure that their financial transactions are clear and accurate.
Each financial statement’s goal is to provide information that will allow stakeholders to know the current situation and future goals of the company. Financial statements may include an income statement, a balance sheet statement and a cash flow statement. The first two are static snapshots which show a company’s financial standing, whereas the third is forecasted based on the current trends.
Transparency and accuracy in financial transactions and reports is a arduous process. Accounting journals are the simplest way to record a financial transaction. Each entry is manually recorded by accountants. It is time-consuming and is prone to errors.
A unified financial statement also referred to as term consolidated financial statement, is a different option. This report shows the entire financial transactions of each institution within a university. By substantiating each transaction at the date of entry and examining all transactions that are material every quarter, the university can create consolidated financial reports that are free of material mistakes.