How to Create Easy and Accurate Financial Records

Large companies and small and medium-sized businesses (SMEs) are required to maintain their accounts to assess and track their progress, as such, let us consider how to create a simple financial bookkeeping process that uses Microsoft Excel.

Definition of Financial Book

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A financial book is a summary record consisting of transaction data over a specific time period, such as a fiscal year. 

This financial report can be used to depict the company’s overall performance, with the process not be underestimated because financial bookkeeping is a requirement when submitting the Annual Tax Return (SPT) online.

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Functions of Financial Bookkeeping

1. To Reflect the Company's Condition

Firstly, financial bookkeeping provides a picture of the company's condition, and through maintenance, bookkeeping helps assess the success of a business, and determine if the business is experiencing profits or losses, what its cash flow is, and its sources of business capital.

However, although the data consists of only numbers and amounts, it can serve as a fairly accurate benchmark, and investors can see whether the company's financial condition is healthy.

2. As a Basis for Evaluation

Secondly, bookkeeping functions as a basis for evaluating ‘the business’, providing an accurate picture of a company's condition, and allowing the results to be used for evaluation purposes.

From this evaluation, you can plan appropriate improvements and implement new policies to enhance the online shop's business conditions in the future.

3. As a Form of Accountability

Thirdly, bookkeeping functions as a form of business accountability, and although this process may start as a personal endeavor, inevitably it includes several entities such as investors or shareholders.

Therefore, it is advisable to maintain financial bookkeeping as a form of accountability to all parties involved in your business, especially for investors.

4. To Enhance Business Credibility

The final function is to enhance the credibility of the business. Financial bookkeeping can serve as an indicator that the company is well-organized and run professionally.

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How to Create Financial Reports Using Microsoft Excel?

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1. Make Sure You Have Excel on Your Computer

Firstly, ensure that you have the Excel program installed on your computer. This feature is usually a built-in program for computers running the Windows operating system.

2. Use Available Templates and Features 

Secondly, utilize the available templates and features. In this case scenario, select the Menu Button and click on the Wizard.

You will find various templates in Excel, and with these templates, you can easily create different financial reports, however, try to select a simple template that meets the needs of your financial report.

3. Create a Transaction History

Thirdly, start creating a Transaction History. Make sure to record detailed expenses incurred while running the business.

Recording expense transactions will provide an overview of the total amount spent as business capital over a certain period, and in this way, you can more easily determine pricing and target profit margins to break even.

4. Create a General Journal

Fourthly, create a general journal. At this stage, try to sort the transaction dates from the newest to the oldest.

Additionally, write down the debit and credit information completely by using the appropriate formulas to ensure the calculations match your records, because, if there are any discrepancies, recheck the details and make sure there are no errors in the information you have used.

5. Create a General Ledger

Fifthly, attempt to create a general ledger after completing the general journal.

In this case scenario, group each account created in the transaction history to know the ending balance for each one.

6. Create an Adjusted Trial Balance

Finally, create an adjusted trial balance using the SUM formula to determine the values of assets and liabilities. If the values are equal, it means each step has gone through the correct calculation process.

You can compile this report along with a written narrative report. Financial reports typically consist of three categories: the Income Statement, the Statement of Changes in Equity, and the Balance Sheet.

Baca juga: Pengertian Audit Laporan Keuangan, Tujuan dan Istilah-Istilahnya

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What Are the Elements of Financial Accounting?

In creating financial accounting, you will need to consider the following 7 essential elements, which are:

• Assets
• Liabilities
• Equity
• Revenue
• Expenses
• Profit
• Loss

This is a synopsis of how to create an accurate and simple financial accounting system, serving as a summary of all sales records for your business.

To make the process easier, faster, and more practical, you can use digital systems with the Youtap Application.