Learn something new every day
More Info... by email
An accounting record is any type of electronic or hard copy document that provides information regarding the financial status of an individual or entity. Records of this type are used to create more detailed accounting records such as ledgers, journals, and other types of accounting books. The main function of these documents is to create an accurate history of all financial transactions related to a given period of time, including income received as well as disbursements made for relevant expenses. Along with money transactions, these books of account also make it possible to determine the balance between assets and liabilities.
A number of documents are included as part of the process of preparing and maintaining accounting record books. Invoices issued by a business are one of the fundamental documents that are noted and tracked in ledgers and journals. The invoices make it possible to keep track of potential income that can reasonably be anticipated by the business. By entering the invoices and the invoice amounts in the accounting books, it is much easier to apply checks or other forms of payment that are remitted by customers when and as they arrive and are prepared for deposit into a bank account.
Invoices that relate to purchases made by a business are also essential to maintaining accurate accounting record books. As with the invoices issued by a business, those that are received must be logged into the accounts payable records, making it easier to establish a schedule for issuing payment for those invoices. The check or mode of payment that is used to settle the balance on those invoices is also considered an accounting record, and is usually noted within the accounts payable in conjunction with the appropriate invoice.
All monetary transactions involved with the operation of the business are considered accounting records of one type or another. Both manual and electronic copies are kept on file, making it much easier to check journal entries and ensure that all records are in proper order. When generally accepted accounting principles are followed, it is much easier to retrieve proper records of assets, records of liabilities, and any sub-group of those records that relate to any payables or receivables transaction.
Maintaining accurate accounting record books in some form is often required for tax purposes. This is true for both individuals as well as businesses. Failure to maintain copies of essential supporting documents can often create issues if a tax audit is called, and may lead to certain deductions being disallowed for lack of documentation. For this reason, many individuals and businesses make use of accounting software to keep all entries in order, while also keeping copies of checks, invoices and other supporting documents that back up the entries made in the accounting books themselves.