Q2 Lesson 7

Business
Records
Learning objectives:
•Identify the reasons for
keeping business records.
•Discuss the different
types of records for
accounting and tax
purposes.
•Enumerate the best
practices of record
keeping.
 Business record
❑Is a document (hard copy
or digital) that records
business dealing.
❑Includes meeting
minutes, memoranda,
employment contracts,
and accounting source
documents.
 PREPARATION: 15 MINS
GROUP ACTIVITY! PRESENTATION: 3-5 MINS
GROUP 1: GROUP 3: Research and
Research and present the present the types of
Importance of Keeping business records. Cite at
Good Records. least 7 examples & explain.

GROUP 2: GROUP 4:
Research and present the 4 Research and present the
types of financial Best Practices of Record
statements. Keeping.
 Importance of Keeping Good Records:
1. Monitor the progress of the business
2. Prepare the financial statements
3. Identify sources of income
4. Keep track of the deductible expenses
5. Keep track of the basis in property
6. Prepare the tax returns
7. Support items reported on the tax
returns
Importance of Keeping Good Records:

1.Monitor the progress of the

business
The good records need to monitor
the progress of a business. Records
can show whether the business is
improving, which items are selling,
or what changes the need to make.
Importance of Keeping Good Records:

2. Prepare the Financial Statements

These include income(profit and
loss) statements and balance
sheets. These statements can help
in dealing with the bank or creditors
and help manage the business.
Importance of Keeping Good Records:

Income statement
– shows the
income and
expenses of the
business for a
given period of
time.
Balance sheet
– shows the
assets, liabilities,
and equity in the
business on a
given date.
Formula:
Total assets=
Total liabilities+ Total
equity
Cash flow statement
▪is a financial statement
that provides aggregate
data regarding all cash
inflows that a company
receives from its ongoing
operations and external
investment sources
Statement of owner’s
equity– is the amount
of money invested by the
owner in the business
minus any money taken
out by the owner of the
business.
Formula:
Owner’s equity= total
assets-total liabilities.
Importance of Keeping Good Records:

3. Identify Sources of Income

The money or property will
receive from many sources. The
records can identify the sources of
income. This information will help
to separate business from non-
business receipts and taxable from
non-taxable income.
Importance of Keeping Good Records:

4. Keep track of the

Deductible Expenses
Keep the record especially
the expenses will greatly
need when preparing the tax
return.
Importance of Keeping Good Records:

5. Keep track as the Basis in

Property
The basis will be used to figure
the gain or loss on the sale,
exchange, or other disposition of
property, as well as deductions
for depreciation, amortization,
depletion, and casualty losses.
Importance of Keeping Good Records:
6. Prepare the Tax return
Types of Records for accounting and tax
purposes:
• Business expenses
• Petty cash
• Credit card statements
• Vehicle use log
• Bank statements
• Travel log
• Annual tax returns
• Cash register tapes
• Quarterly tax filings
• Credit card sales
• Payroll receipts
• Inventory • Invoices
• Sales • Cancelled checks
• Income • Check stubs
Business
➢Are documents
Documents which basically
support the
existence of
transactions.
 The most common types of business
documents that support transactions and
events are as follows:
Business
Documents 1. Purchase order – it is an official
business document issued by the
buyer to the seller of goods.
2. Invoice – it is a commercial business
document issued by the seller to the
buyer.
3. Official receipt – it is a commercial
document that indicates payment or
receipt of cash.
 4. Delivery receipt – it is a document that
serves as an evidence that the goods or
services are received.
Business 5. Receiving report – it is a document used
Documents within the business upon receipt of the
goods shipped by the courier or
forwarder.
6. Check – it is a document that orders a
payment of money from the current
account maintained in the bank.
7. Voucher – it is an internal business
document that authorizes the incurrence
or payment of obligations.
Financial forms/records:
1. Accounts Receivables
These are valuable not only
to decision on extension of
credits but also to make
accurate billing and
maintenance of good
relations with customers.*
Financial forms/records:
2. Inventory records
These records will
be used to control
your inventory
items.
Financial forms/records:
3. Accounting Payable
These liability record show
what your firm owes,
facilitates obtaining of
available cash discounts and
informs you when payments
are due.
Financial forms/records:
4. Sales Records
These could be used in the
analysis of the effectiveness
in advertising and
promotions of your
products, market coverage
and profitability.*
Financial forms/records:
5. Production Records
These records provide basis
for your product costing and
detect lost profits/costs as a
result of idle
manpower/machineries.
Financial forms/records:
6. Payroll Records
Shows the total
payments you pay your
employees and provide
a basis for computing
some legal payments.
Financial forms/records:
7. Cash Records
Shows all receipts and
disbursements made by
your firm. They contain
your firms cash flow and
petty cash balances.
 Best Practice of Record Keeping
Depending on the industry, keeping the following records may
be a legal requirement, but it is best practice to keep them for
5-7 years:
1. Employees accreditation certificates and
licenses – copies of permits, registrations, and
licenses of employees who need to do their
jobs
2. Employees resumes and job applications
 Best Practice of Record Keeping
3. Performance reviews – include assessments
of staff performance and agreements between
you and your employees.
4. Position statements and job advertisements
5. Customer records – personal details, product
purchased and product inquiries that are useful
for finding new customers.
 Best Practice of Record Keeping
6. Customer complaints – details of complaints
about products, services, staff or anything else,
and steps taken to resolve them
7. Details of any disputes with other businesses –
including how you went about resolving
disputes.
 Best Practice of Record Keeping
8. Details of advertising campaigns and success
– to make it easier to repeat advertisements and
plan future advertising campaigns.

9.Insurance policies – a regular review and

update of your business insurance, especially
when your business grows or changes.
Words to ponder!