The first step in getting your data ready to enter as a transaction is to know what your source documents are and file them accurately. Although this may seem like an obvious thing, many businesses fail to accurately record and file documents, which leads to lost paperwork and lost customers, as well. What types of source documents does a business have? They can be grouped into these types:
1. Any paperwork coming from a vendor is considered accounts payable. This can be invoices for merchandise, telephone bills, business licenses, etc.
2. Any documents that are for a sale to a customer. This includes cash sales, credit sales , or credit memos. Cash sales are considered sales receipts. Credit sales are called accounts receivable.
3. Any paperwork coming for taxes is considered cash payment documents. These can be paperwork from the IRS, city for city taxes, sale tax & b&o taxes, etc.
4. Any paperwork for business credit cards associated with business expenses. These are considered credit card payables.
5. Any lines of credit or note payables from the bank. These are considered as short term or long term notes payable.
6. Investments by investors. These are classified as capital investments.
7. Any checks written out of the company checking account. This can be for a variety of expenses, or other payments, and will be the source document for any of the above accounts payable invoices. It could also simply be checks written out of the account for miscellaneous charges like a prepayment for rent.
Once these source documents are grouped into their respective groups, they should be reviewed and account numbers written on each source document to represent the account where the transation will be entered into the accounting software system. Once these documents are recorded, they must be filed into thier appropriate file. Organizing the filing system will save you hours upon hours of work when you have a customer wanting a refund of merchandise they special ordered, as long as you have filed things properly.
Copyright Jeanine Pfeiffer