Transaction Records

A transaction record is the proof of a transaction, e.g. a receipt for something you have bought, or a bank statement showing that an invoice has been paid by one of your customers. Every event in the business that involves its finances should be supported by a transaction record.

You should record all financial events in date order as they occur. When you record an event in your accounting system, you will do so by creating a set of journal postings known as a "transaction". This transaction will classify the event according to certain accounting rules, allowing it to be included in the correct area of your reports and ensuring you can recollect the event later. Each transaction will be distinguished by a unique sequence number. You should keep their supporting documents (the hard copies of the transactions) in a file, marked with the same sequence numbers (and with the date on which the transaction occurred). The transaction should also contain a code, or account, classifying its nature. This is where your Chart of Accounts comes in as a tool for the systematic recording of financial events.


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