Break-Even Analysis – Unit 3: Investigating
Financial Control
3.4 Recording Financial
Transactions
Unit 3: Investigating Financial Control
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Contents
For more detailed instructions, see the Getting Started presentation
Flash activity (these activities are not editable)
Teacher’s notes included in the Notes Page
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Key skills
Printable activity
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Recording financial transactions
In this section, you will look at
different ways of recording
financial transactions:
Daybooks
Accounts
Petty cash
Cash registers
EPOS
Manual vs. electronic recording systems
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Assignment: Deep Fried Fred’s (2)
Purchase documents are one way of recording
financial transactions – but there are others.
Think again about Deep Fried Fred’s,
but this time consider its customers,
rather than its suppliers.
Would it be sensible for staff at
Deep Fried Fred’s to fill out purchase
documents for each and every person
wanting to buy a portion of fish and chips?!
As a class, what other methods can you
think of that businesses might use to
record financial transactions?
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Daybooks
Businesses use daybooks to keep track of each and every
sale and purchase that takes place.
Daybooks record
the date, the
invoice number,
the name of the
customer or
supplier and the
final amount.
Why do you think daybooks are a useful way for
businesses to record financial transactions?
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Different types of daybook
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Accounts
Businesses keep accounts in order to summarize all their
financial information.
Accounts are used to
record a wide range of
information according
to a number of
different categories.
Businesses use them to
keep track of how much different customers owe.
How do you think businesses might
categorize their accounts?
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Petty cash
The petty cash account records small items of expenditure,
such as stamps, envelopes, and even bus and taxi fares!
The petty cashier keeps a small amount of money on the
premises, usually in a locked box, to issue for such purposes.
Petty cash is also used to reimburse staff who pay for
business items with their own money.
Employees who wish to claim
money from petty cash must
complete a petty cash voucher.
The information on this voucher
can then be recorded in the petty
cash account.
What other items do you think would commonly
be bought using the petty cash account?
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Cash registers
Small shops will often use cash registers to
record the customer sales that take place.
With this system:
the price of the product being purchased
is keyed into the cash register
a button is pressed to release the cash drawer
money is exchanged between
the cashier and the customer
the amount of money spent is recorded
by the machine and a receipt is printed.
Some cash registers have programmable keys
that can record what type of product is being
purchased. Why do you think this might be?
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Direct electronic input
Direct electronic input, or electronic point of sale (EPOS)
systems are used by many retailers in order to link the
business’s cash registers to a central computer.
The EPOS system allows the cashier to scan
the bar code on each product. The computer
then identifies the selling price from this code.
Advantages of the EPOS system include:
credit and debit cards can be processed
receipts can include specific information, such
as the cashier’s name and the items purchased.
Which retailers can you think of that use EPOS?
Why do you think they use this system?
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Which is which?
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Manual vs. electronic recording
Although some businesses record financial transactions
manually, most businesses today keep track of financial
activity electronically.
Electronic recording systems automatically:
record all sales and other transactions
update account information after a transaction
produce and organize purchase documents
highlight outstanding payments due
help generate important financial reports.
What advantages do you think electronic
recording systems have for businesses?
When might manual recording systems be better?
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Assignment: Thinking about recording
financial transactions
The way a business records its financial transactions
will depend largely on the type of transactions
taking place.
For a business of your choice, work in groups to prepare a
presentation discussing:
the main financial transactions
that take place;
how these transactions
are recorded;
how these records help the
business to manage its finances.
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