The Accounting Process

The accounting process starts with the recording of business transactions that are
taken from ‘source documents’. The source documents are of different types
depending on the type of transactions. Example of source of documents are invoices,
bills, receipts, debit notes, and credit notes.

The owner of the Warong Cafe is manually recording the daily sales report. The
daily sales report is their end-of-day report that measures costs, sales, and future sales.
Revenue (sales, tax, tips, and credit card fees) are reconciled against settlement
(accounts receivable, cash ). The result is either the business on that day, cash over or
short. A daily sales report tells the business did that day, so they can compare with
other days that week, month,or year.

They also have the chart of accounts that records high-level transactions like
revenue, expenses, assets, liabilities, cost of goods sold, and equity. Each of these
buckets is further categorized into smaller ones, such as chicken costs, drink costs,
staff wages, marketing, utilities, and others.

Next is cash flow statement. This is to know how much money the business have
on hand, right now. Operating cash flow is whether the business able to generate
enough positive cash flow to maintain or grow the operations or whether they should
seek another alternatives to improve the business.

All of above is the basic transaction that The Warong Cafe recording for their
business manually and daily. The owner will hire an accountant to make an proper
transaction such as financial statement for monthly, which is each of 3 months.
Financial statement requires statement of profit or loss and statement financial
position. The business will know their profit and loss overall each of three months.