1. Day-to-Day Recording
Businesses must systematically record all financial transactions, including sales, purchases, expenses, and payments.
- Sales & Revenue: Every sale must be logged to track income and customer payments.
- Purchases & Expenses: Business expenses, such as rent, utilities, and supplies, must be recorded for accurate financial reporting.
- Payment Tracking: Outgoing payments, including salaries and vendor invoices, must be documented to maintain cash flow transparency.
- Accounting Standards: Transactions should follow double-entry bookkeeping to ensure accuracy.
2. Bank Reconciliation
Companies must regularly match bank statements with their financial records to ensure accuracy.
- Purpose: Reconciliation helps detect errors, fraud, and missing transactions.
- Process: Businesses compare their ledger balances with bank statements to identify discrepancies.
- Frequency: Ideally, reconciliation should be done monthly to maintain financial integrity.
- Common Issues: Unrecorded bank fees, outstanding checks, and duplicate transactions can cause mismatches.
3. Petty Cash Management
Businesses must accurately track minor expenses using a petty cash system.
- Purpose: Petty cash covers small, everyday expenses like office supplies and travel costs.
- Control Measures: Companies should maintain receipts and transaction logs to prevent misuse.
- Replenishment: Petty cash should be regularly reviewed and refilled to ensure availability.
- Security: Funds should be stored in a locked cash box and monitored by a designated custodian.
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