A financial transaction is a business event that involves at minimum two parties and impacts the financial health of those parties. At least one party will alter the amount of funds on its account (assets or liabilities). The timing of a financial transaction may vary depending on whether the company follows the accrual or cash accounting method. The choice of these accounting methods impacts the reporting process and taxability.
Stakeholders depend on financial statements to gauge the health of a business and their investments, such as loans and shares. All organizations must ensure that their financial transactions are clear and accurate.
The primary purpose of any financial statement is to provide information that helps those who are interested in the company’s position and long-term goals. Financial statements contain a income statement, cash flow statement and balance sheet. The first two are static images of a company’s financials, while the third one is forecasting future performance according to current trends and plans.
It is challenging to provide complete and transparent financial information and transactions. Accounting journals are the most fundamental method to record a financial transaction. Each entry is manually logged by accountants. This is time-consuming and likely to be prone to errors.
A unified financial statement, also known by the name consolidated financial statement, is an alternative. This report details the entire financial transactions of each institution within the university. By substantiating every transaction at the time of entry, and examining all material transactions quarterly the university can create consolidated financial reports which are free of any significant mistakes.
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