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13. What are financial records?

Every organization is required to keep financial records depending upon their structures. Here, we will highlight the basic financial records that a company is required to keep. The financial records that a company is required to maintain vary from company to company so if you are unsure what financial records your company is required to keep, it is better to seek professional advice.

We have illustrated some of the basic financial records that the law may require a company to keep:

• general ledger, recording all the company’s transactions and balances (revenues, expenses, assets, liabilities etc.) or summarising transactions and balances detailed in other records.

• cash records – e.g. bank statements, deposit books, cheque books, petty cash records

• debtor and sales records – e.g. a list of debtors and their balances, delivery dockets, invoices and statements issued, a list of all sales transactions

• creditor and purchases records – e.g. purchase orders, invoices and statements received and paid, unpaid invoices, a list of all purchases, a list of all creditors and their balances

• wages and superannuation records

• a register of property, plant and equipment showing transactions and balances in relation to individual items

• inventory records

• investment records, e.g. contract notes, dividend or interest notices, certificates

• tax returns and calculations, e.g. income tax, group tax, fringe benefits tax and GST returns and statements

• deeds, contracts and agreements.

A company would also normally prepare the following statements regularly (say, monthly) to manage its business performance and provide to lenders, etc:

• Statement of Financial Performance – a statement showing the company’s revenues and expenses and the profit or loss that results from these items

• Statement of Financial Position – a statement showing the things of value the company owns and the debts the company owes, and

• Statement of Cash Flows – a statement summarising cash inflows and outflows.