Over the years, the accounting process has become mandatory for every flourishing business or organization. Simply because there is a constant need for businesses to grow and make maximum earnings with minimum chances of capital wastage.
When a business is prospering and making large sums of profits, its chances of being duped by some corrupt client or someone from the workforce. Hence, auditing becomes a must in these situations. Now the audit can either be internal, external or independent where the internal audit would deal with the checking of accounts being done by the company’s own auditors.
On the other hand, the external audit could be conducted by a party of extra auditors called in from outside. The third type of auditing which is independent of the rules and customs of the business being audited will have auditors come over from organizations that specialize in these tasks.
Therefore, it is imperative for companies or businesses to keep their accounts clean and avoid independent auditing that could wreck their image in the market.
To initiate the accounting process, a company or business must have a good control over their accounts. Every transaction made regardless of being new or old should be jotted down in a journal. Every journal should have specific entries about the area of investment that’s being recorded in it. For example, transactions made on sales should go into the sales journal with purchasing into purchase journals etc.
Having journals placed with each recording will help get your papers in place when it’s time for auditing. This means that every cent you pay in accordance to your company should be accounted for and has a receipt as a proof of the transaction.
Preparing the documents for your source of income and way of expenses will give you a balance sheet. This balance sheet will provide you with detailed information on how your money is being spent or saved and what steps you can take to increase the inflow of profits in your business.