Juggling through a heap of paper bills, and combining them just to track business transactions is time-consuming and therefore frustrating. You, as a business owner, don’t want to do that but surely want to keep an eye on your business transactions! Don’t worry about how will this happen because day book reports make it possible.
What is a day book report?
Day book reports are crucial for your business. They provide extensive details of every business transaction that occurs within a specific time. Hence, they are known as daybook reports. They show all financial transactions in a neat and detailed manner.They show all financial transactions in a neat and detailed manner. Therefore, they provide a more organised way to track business transactions and gauge their performance.
Purpose of day book reports
As daybook reports contain comprehensive information about every transaction that happens in your business, these are essential to develop important financial statements for your business. Some of them are balance sheets, income statements, etc. Also, these are used to reconcile your bank and other final statements. As daybook reports contain all transactions, while reconciling your bank and other financial statements, you can also cross-check that all bank statements are reconciled without a miss and are correctly done.
Types of day book reports
According to different kinds of transactions in businesses, there exist different kinds of daybooks as well. The most common types of daybooks existing in business are:
1) Purchase day book
All goods that are purchased on credit are recorded in this day book.
2) Sales day book
All goods sold on credit are recorded in this day book.
3) Purchase return day book
Records of goods that are returned to suppliers are recorded in this day book.
4) Sales return day book:
Goods returned by customers are recorded in this day book.
5) Cash day book:
All transactions carried by cash or cheque are recorded in this day book.
The general format of a day book in business accounting
Depending upon the type of day book reports, some additional fields may be added. But, in a very general format, any typical day book report consists of the following fields:
Advantages of day book reports for your business
Here are top 3 benefits that a day book provides:
Helps to make informed decisions
Day book reports make the bookkeeping process simpler as bookkeepers refer to transactions recorded in day books. Bookkeeping makes all the transactional records organised and ready to be viewed when required. With this, you can understand the financial position of your business which can help you take better and more informed financial business decisions.
UnderStand cash flow trends
Cash flow statements are critical to understand the inflow and outflow of cash for defined accounting period of your business. Even to construct correct cash flow statements, the day book plays a major role. With cash flow statements, businesses can identify trends in their cash flow.
Helps to secure loans
Day book reports present organised financial transaction records for businesses. Banks and other financial institutions favor giving loans to businesses that present healthy and organised financial transaction records. Therefore, properly maintained day books can help you to secure loans.
Maintaining daily books is important for business as they provide numerous benefits. These days, there are many apps that allow you to maintain your day book digitally and securely. This means they keep you free from maintaining huge stacks of paper. MyBusiness app provides this facility too along with other facilities such as easy billing, filing GSTR-1, quick downloads of a few GSTR reports, generating payment links and more which make daily business financial transactions easy. Explore the app today.