Page 403 - Business Principles and Management

Unit 5

service for customers and reducing manual paperwork and labor costs for the
store. Products and their costs can actually be tracked continually from the point
of production through the entire distribution process until the products are sold.

CHECKPOINT
Identify several reasons businesses need to maintain
financial records.

Types of Financial Records

Financial records in all types of businesses have similar characteristics. A few of
the most common records kept by all businesses are discussed next.

CASH RECORDS

Cash is constantly coming into a business from customers
and other sources, and cash must go out of the business
business note to pay for things purchased. Regardless of how financial
records are maintained, businesses follow similar proce-
dures in accounting for cash. Figure 15-1 lists several
suggestions for the safe handling of cash.

Although one of the attractions of e-mail is CREDIT RECORDS
the ease and the speed of communication, we
sometimes forget that messages can take any- All businesses must deal with money that they receive
where from several minutes to several hours as a result of the sale of goods or services to customers.
to be delivered. Sometimes e-mail servers mal- Because most businesses sell on credit, they keep records
function. Don’t expect a person has received showing what each customer owes and pays. This record
your e-mail just because you sent it. is called an accounts receivable record. When a credit
Once you receive and read a message, you sale is made, the salesperson completes an order, which is
can delete it, save it, print it, forward it, or submitted to the accounting department. The accounting
reply to the original sender. When responding, department enters the sale into the accounts receivable
include enough information in your reply and record and sends an invoice of the sale to the customer
the subject line so your recipient knows what that identifies the payment terms and dates. When pay-
it’s about. Businesspeople who receive many ments are made by the customer, the payments are
e-mails during the day may forget the specific recorded in the business records.
topics of earlier messages. Businesses must also keep records showing money
E-mails can also be forwarded to other they owe and payments they make for all credit pur-
users. However, be sure the recipients actu- chases. This kind of record is an accounts payable record.
ally have an interest in or a need to see the Each time a credit purchase is made, that purchase and
message. Do not forward a message without its terms are recorded in the accounts payable record.
the permission of the original sender. When payments are made to the creditor, they are also
Group e-mails present major problems in recorded so the company has an accurate record of what
business. A reply to the original sender may they owe on each account.
go to the entire group. Sending e-mail to
large numbers of people can quickly clog a DEPRECIATION RECORDS
company’s e-mail system and upset recipients
who are already inundated with e-mail. An asset is anything of value owned. Businesses need to
have a variety of assets, such as buildings, vehicles, equip-
ment, and inventory, for use in their normal operations.

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