Financial Transactions and Reporting

A financial transaction is an event that involves at most two parties and directly affects their financial situation. It causes at least one party to alter the amount of money that is in its accounts (assets and liabilities). The timing of financial transactions will vary based on whether the entity follows cash or accrual accounting guidelines. The use of these techniques impacts reporting and taxability.

Stakeholders rely on financial statements to evaluate the health of a company and their read this investments, like shares and loans. All entities must ensure that their financial transactions are transparent and accurate.

The main purpose of a financial statement is to provide information that helps users understand the company’s current position and long term goals. Financial statements may include a balance sheet, income statement, and cash flow statement. The first two are static snapshots of the company’s financials while the third one is an estimate of future performance based on the current trends and plans.

The ability to provide accurate and transparent financial transactions and reporting is a complex process. Accounting journals are the most basic method of recording a financial transaction. Each entry is manually recorded by accountants. This can be time-consuming and is also prone to error.

A unified financial statement also referred to by the name consolidated financial statement, is an alternative. This report details the entire financial transactions of each institution within an university. By substantiating every transaction at the time of entry and examining all material transactions quarterly the university is able produce consolidated financial statements which are free of any significant errors.