Meaning of Financial Accounting Part V
4.1.1 No booking without receipt!
The principle “no booking without receipt” is not only important for paper receipts, but of course also applies synonymously for electronic documents . It means that every booking case must be proven with a receipt – reaching the till must therefore also be accompanied by a receipt. If there is no so-called external receipt, an own receipt must be issued, which can be used to assign the booking to a business case. According to the BMF, the evidence between the booking and the business transaction is also referred to as the document function and is the fundamental basis for any evidential value that must be present in the accounting. The content of the document depends on what function it is supposed to have.
Important : Business correspondence can also have the character of a receipt.
4.1.2 Types of Receipts
According to Aviationopedia, there are three types of receipts:
- Foreign documents or external documents that are created outside the company.
- Internal receipts , or own receipts, arise within the company.
- The so-called emergency receipts , which must always be issued if there is no third-party receipt and a replacement is required.
4.1.3 Checklist: Which documents are important for accounting?
The invoices are certainly one of the most important documents of a company. Receipts for deposits and withdrawals are also receipts, and bank statements and travel documents are also accepted as receipts. Order confirmations and delivery notes, proof of export for foreign business as well as offers and reminder letters are also considered to be documents and must be treated in the same way. The business correspondence mentioned becomes evidence whenever it can be used to prove a payment or settlement of a liability.
4.1.4 Create order in books and receipts
In order to be able to provide information in the event of a tax audit or even just the creation of statistics on a certain matter, receipts and books must be kept properly. One possibility is to use a quick filing system, in which the documents are sorted first. From there they have to go to the final filing, which will be in folders for paper documents. These folders in turn belong in filing cabinets or storage depends on the type of filing. A hanging folder can be found in a corresponding cupboard, whereby hanging files are often rearranged into normal ring binders for long-term archiving.
Tip: Always sort the receipts according to a certain system! For example, invoices can be sorted according to the date, the order according to the invoice number is comparatively difficult to understand. It is also possible to assign them to specific projects so that a project always contains all of the related documents. Then, however, there should be an overview in list form in which the invoice numbers, the respective project and the amount involved are entered. This makes it easy to find the individual receipt when you ask about it later.
Electronic documents are saved as PDF files, but this form of archiving does not comply with the principles of proper bookkeeping. Storage in the cloud is also possible . Here, too, access is available at any time and, above all, from anywhere in the world. This makes electronic filing particularly interesting when different people at different locations should have access to it.
4.1.5 Storage of books and receipts
The Commercial Code differentiates between a period of six and ten years with regard to retention periods. In general, it can be said that particularly important documents need to be kept longer. Examples of this are balance sheets, annual financial statements and tax documents, which have a period of ten years . A simple incoming invoice only has six years . It is important that the receipts must be clearly legible throughout the entire period. If this is not guaranteed, for example because they were printed on thermal paper, we recommend scanning the receipt. The file is then saved electronically. The original should still be kept. It is not possible at this point to set all retention periods list, therefore the land register extracts (10 years), the cash reports (10 years) and the offers that resulted in an order (6 years) are only examples.
4.2 Assets and Liabilities
The assets that a company has are known as assets. They show in the company’s balance sheet what it has used its capital for. On the liabilities side, however, the consolidated assets of the company are listed, which means that the total of the assets is located there. One side gives the total or the origin of the assets, the other the use of them.
Note: The sum of all assets always corresponds to the sum of the liabilities. This sum is called the “balance sheet total” in financial language.
4.3 Debit and credit
Debit and credit are often referred to as the most important fundamentals for bookkeeping and identify two sides of account management. It is about the recording of business cases that are represented with fixed booking records. The posting is always based on two accounts, debit and credit are on the opposite side.
The expenses of a company are in nominal posted when it is a passive account. On the other hand, the debit posting is an incoming payment on the active account .
The entry in credit denotes income if it is an income account. Having there denotes an outgoing payment. Since double-entry bookkeeping is required for most companies, there must always be one entry in the debit and one in the credit. The debit is the counterpart to the credit and is always on the left.
