Short notes about financial statement

Recording the financial transaction of a company as hard copies is known as bookkeeping. Accounting book generally contains the transaction includes sales, income, purchase, debit and credit and the upto date business transaction. Outsource bookkeeping services help business to manage the cash flow effectively in order to resist the recession. Lot of changes happened in maintaining the books with the help of the computer and software considering their durability and accessibility. Even though we are depending on software for quick functioning, it is important to understand the manual process to create the financial statements. The fundamental of bookkeeping starts with understanding the function of debit and credit. Subsequently we have to understand accounting journals and general ledgers to create a financial statement.

Accounting journals contain debits and credits. They are mainly be used to create the financial statements. For each financial transaction, the total amount of debits must be equal to the total amount of credits. Different types of journals are used depending on the transaction. Some of the journals are cash journal, purchase journal, general journal, Cash disbursement journal etc. Journals are created by the group of general ledger. Ledger is the initial stage of recording the financial transaction. The accounting transactions have been classified according to their purpose and ledger have many categories and sub categories.

Financial statement is nothing but the balance sheet and the income statement. It is advisable to have monthly accounting practice would reduce the risk of economic slide down. The general ledger accounts have to be transferred and the trial balance has to be created on a monthly basis. Trial balance is used to balance the unadjusted expenses. Once the credit and debit are balanced, it will be transferred to balance sheet and the income statement. This would determine the standard of your business. Hence, accounting is the crucial part that requires minutes of observation. Your accounting outsourcing provider help you deal your accounts with lot of observation.

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