Minimum Information Needed for Accounting Records

Accounting records generate some very useful information that helps to make business decisions. But minimum information needed for accounting records. These originate from sales, expenses, income, cash movement, and the like. This may be gauged from the under-noted presentation:

Information needed for accounting records

1. Sales

The small business owner should know not only the total sales by day, week, month, quarter, and year, but should also be to break these sales down easily into departments, products, or types of merchandise as appropriate to the particular business.

A grocery store usually divides its sales into meats, produce, dairy, and staple groceries. A separate division may be needed for a delicatessen if one is a pan of the store.

Drugstores may divide sales into prescriptions, housewares, self-medicines, tobacco, and magazines, and they may even have a separate category for gift cards.

The division of sales is necessary for the owner to be able to decide on the profitability of each department or line and to make decisions about it.

2. Operating expenses

Information is needed for total expenses, departmental expenses, product expenses, and any other appropriate divisions of expenses.

Retailers’ expenses may be classified as selling expenses and general expenses.

Owners of factories will want to divide total expenses into manufacturing, selling, and administrative expenses.

3. Inventory

The accounting records must provide ways to give the owner regular information about the total inventory and its major divisions. Inventory control was discussed in an earlier chapter.

4. Payroll records

Pay roils involve much more than the issuance of weekly, bimonthly, or monthly checks to employees.

The requirement of withholding taxes, unemployment taxes, and other payroll deductions must be noted in detail or each payday.

5. Cash Register

Use a modern cash register. This essential piece of business equipment can be invaluable in assuring accuracy in recording transactions.

But it can do much more. Modern cash registers can provide a classification of sales and expenses paid in cash into almost any group desired.

Sales can be divided into departments, products, or lines of merchandise and by sales representative.

The register wail then provides daily subtotals for each classification, as well as total sales for the day.

It will also provide subtotals for cash sales and credit sales. Representatives of companies selling these machines will teach the individual firm how to utilize them to their greatest advantage.

6. Accounts receivable and accounts payable

Set up records for accounts receivable and accounts payable. If sales are made on credit and the company is carrying its own receivables, a record for each customer will also suffice.

Copies for sales sips are necessary to post each sale. This book is known as an accounts receivable ledger.

The record of amounts due to others is known as an accounts payable ledger, and it operates similarly to the accounts receivable record.

In both cases, it is important to be able to tell immediately the current amount owed by a customer or the amount owed to a creditor.

Many small firms use computers to track this data, but it is important to have manual records, too, in many cases.

7. Taxes

Local, country, state and federal taxes are an unavoidable part of managing any business. Details, except for federal income taxes, will vary from one location to another.

Requirements must be determined, and then provisions for getting the proper information can be arranged.

minimum information needed for accounting records
Minimum Information Needed for Accounting Records

8. Office Supplies

Provide the firm with a businesslike set of supplies. Any firm’s image, its public relations, and its accuracy in record keeping are all served by using attractive and businesslike supplies.

9. Business papers

Carefully reserve all underlying business papers. All purchase invoices, receiving reports, copies of sales slips, invoices sent to business firm customers, all canceled checks, all receipts for cash paid out, and all cash register tapes must he meticulously retained.

They are not only essential to maintaining good records, but they may be important if legal action involves any of these actions.

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