Business owner may often have trouble in controlling financial transactions. In fact, incoming or outgoing transaction records are necessary to run the business smoothly.
Due to its importance, following are the tips to control the business debit and credit:
1.Record all sales and purchase transactions. For sales and purchase transactions, you have to collect the transaction receipt such as notes or struck. Keep them well and do not lose them. The missing record will make your calculation fails. When all transactions are collected, then you can categorize them into debit and credit transactions. .
2.Make a transaction journal. After classifying the debit and credit transactions, then make a transaction journal. You will find out any transactions made and to avoid missing record you are recommended to make journal entry. A good journal consists of date, account, debit and credit amount. You can also add the transaction number and description.
- Separate the journal contents to the ledger. Unlike the journal form, the ledger classifies the transaction based on its type of. For example a cash account consists of all transactions related to your cash, then accounts receivable consists of transactions related to your receivables. Therefore it will form many tables to separate each of transactions classification.
- Observe the balance sheet reports. The balance sheet report is a part of the financial statements reporting the shareholders’ assets, liabilities and capital for a certain period. Balance sheet report is made to find out the balance value of debit and credit. The correct journal and ledger will show the same numbers as in debit and credit. Otherwise, there is possibility of missing transactions or wrong account record.
- Making financial reports. After recording all transactions, creating journals, moving to the ledger, and observing the balance sheet reports, then the next step is to make a financial statement. Financial statement informs all the performed transaction activities. It is very crucial since it allows you to evaluate your business profit or loss. This is your source to take the next step for your business.
Some people have difficulties at the beginning, especially for those who just started using this method. However, the more you apply it, the more you will get accustomed to. You can also apply the accounting software like Zahir Accounting to support your bookkeeping activities, like making business financial statement. You only need to input the existing transactions and the software will process it. It saves your time and more practical for you to prepare your financial statement.
