Typical Accounting Errors You Want To Avoid

Typical Accounting Errors You Want To Avoid

In today’s dynamic company processes, worries about accounting might have given lower priority in the day-to-day operation. Nevertheless, you certainly agree that accounting is a crucial method for gauging the efficiency of your company. You are highly advised to utilise the services of an accounting firm in Johor Bahru if you do not have a strong history on this location. Right here are the usual accounting blunders as well as exactly how you can prevent them.

Failing to recognise petty cash transactions

What procedures your organisation have in place to track its petty cash transactions (Also see Importance of a Petty Cash Book)? It is a common mistake of many to take the petty cash transactions for granted. It important for your organisation to maintain a document of all its expenses, no matter how insignificant they might appear. Having great documentation of all transactions aids you to handle your financial resources well as your organisation expands (Also see Value Adding Services Provided by Accounting Firms).

Having the perception that profits consistently a reflection cash flow

It’s alluring to key in every deal as revenue whenever it occurs, and also besides, it’s earnings to your company. Nonetheless, this can make your organisation appear much financially stronger than it is and also misrepresent the financial position (Also see Ways to Improve Working Capital) of your organisation. For that reason, you require to recognise the distinctions between cash flow and profits. It is also crucial to know how to maintain documents of each.

Insufficient interaction with your accountant

It is essential to ascertain that your accountant knows the inside out of your company (Also see Accounting Allies You Need for Your Start-Up). In other words, your company can maintain complete as well as timely details records of the transactions. If the accounts are not being updated on a day-to-day basis, likely, several transactions might not be key in properly. This possibly leads to more severe issues along with some untraceable transaction when your accountant tries to close all the accounts at the end of the company’s reporting period.

With that, it is important to ensure that the accountant gets clear as well as timely notifications on affairs relating to transactions. This will certainly make both the bookkeeping as well as accounting procedures simpler.

Failing to reconcile cash at bank with the bank statement

To reconcile the cash at bank with the bank statements, you need to confirm whether the account balances provided in the general ledger are precise and tie with the bank statements’ balances.

The inconsistency in between the general ledger and the bank statement can be a result of some minor expenditures (Also see How Should You Categorise the Expenses for Advertising?) that were incorrectly recorded. Hence, it is smart to reconcile the general ledger against the bank statement to see, for instance, if the bank charges are appropriately taken up. This will certainly assist you in tracking your organisation financial status efficiently.

Final Thought

These typical accounting errors have been seen as insignificant, yet potentially have a damaging effect on your organisation. Consequently, organisations need to work using an accounting service in Johor Bahru to prevent these accounting errors.