Accounting forms have been in existence for centuries and accounts are essential to ensure that financial records are maintained and are reliable. Here we will look at some of the more popular accounting forms and how they can be used to record financial transactions.
The accounting balance sheet is probably the most commonly used of forms. This is used to record the net and gross income of a company or individual. It shows the financial status of the company in relation to the obligations taken up by it on its books.
The financial statement is often referred to as the ‘rolling stock’ and is a summary of the accounts and results of operations. It shows the cash equivalents as well as the liabilities for the company or individual.
More Form Accounting Form Uses
Another common form of accounting is the payment balance sheet which will detail the accounting of any payments made to the owner or managers. It will also show the net income from operations and show the profit and loss account for the period.
If the company is making deposits or loans then it may require a withdrawal form and the withdrawal balance sheet is used to calculate the accounting for these types of transactions. A fixed asset and liability form will list the assets and liabilities, an annual income statement, balance sheet and income statement. This is used for recording sales or purchases of tangible items or services.
Income statement is used for monitoring the financial activities of the company for the long term. This will show the balance between the income from sales and the expenses related to production and any one that is not always paid to the owners or managers.
The balance sheet may be used to highlight if there is a problem with the cash flow or credit system. All transactions are recorded on a monthly basis using a bookkeeping system. Accounts receivable is the largest category in the bookkeeping system and is where customers are paid or supplied goods without being paid back.
Financial statements are normally prepared using an arithmetic method. Numbers are divided by the sign of the decimal point and then added to make a quotient. Then the sum is added and results are presented on a graph and the data for all years is shown to show the change in the business profit, cost of goods sold and operating costs.
For companies that deal with a large amount of accounts receivable and pay offs a Statement of Cash Flows is used. This is used to show the trend in cash flows through the financial year and the trend in the profit of the company. All other companies use a Statement of Financial Position.
All companies are required to prepare monthly statements showing the income statement and other financial statements. These are filed with the appropriate authorities to determine the validity of the balance sheet for all the financial periods.
Accounting forms may seem complex but the use of accounting forms is essential in order to maintain a reliable financial record. In the next article we will look at how to properly record these financial statements. LOOK ALSO : xl spreadsheet download