You may be asked at any time how much you have spent or brought in your household over the past year. You may have an estimate on how well you are managing your paycheques but is it accurate enough. Many people may keep receipts of what has been purchased, which may be accurate enough to the general household. Nevertheless, to the business keeping accurate records is vital in the success and longevity of the business.
There are many points that can be used or applied to why accounts have to be monitored for accuracy: Performance – To see how well the business is competing in its market segment. Information for Stakeholders – If information of the firm is promising then the stakeholders can invest, promote, or continue buying products from the same firm.
Financial Documents – These documents include the final statements of productivity i.e. Balance Sheet. When a sale is made by a business, they either expect payment to be made immediately or later, a credit or cash sale. A "Credit Sale", is usually a sale that requires the customer to pay the firm, at a later date into their account for example, a catalogue retailer.
A "Cash Sale" is when cash is given immediately at the point of sale, when you buy goods at your local supermarket. The document in the sale types above flow as follows. When someone makes a cash purchase for a business. It is vital that a receipt is obtained; this is to show that a purchase has been made to the retailer, and for the business to record how much it has spent on stationary, as it is an expense.