Statement of Accounts – SOA

In Business we issues and receive “Statement of Account” or “SOA” from Customer or Supplier. As the name says, it contains all the type of transactions done from Customer or Supplier and record of it. Customer / Supplier Statement of Account helps them to reconcile their data against our transactions recording. It contains the following details.

1. Invoices
2. Good Receipt record (GRN)
3. Advance Paid or Received.
4. Credit / Debit Notes
5. Sales or Purchase Returns Entries
6. Cheque adjustment entries
7. GL Adjustment entries.

Financial statements are first made a draft statement and only after external auditors reviews these are released as audited statement /annual statement.

As a business owners, we should focus on few reports like Company cash flow statement, Accounts statement, bank account statements to cross verify the business transactions, balance sheet etc.

 

What is a Statement of Account (SOA)?

A Statement of Account is a comprehensive financial document that provides a summary of transactions, balances, and activities related to an account over a specific period. It serves as a detailed record of financial interactions between parties, such as customers and suppliers or clients and service providers. It offers a comprehensive view of financial activities, aiding businesses in making informed decisions and ensuring effective financial management.

This document outlines the flow of funds, invoices, payments, and any outstanding balances, ensuring transparency and facilitating effective financial management.

What Statement of Account Contains?

A Statement of Account typically includes the following key components:

1. Account Information: Details of the account holder, account number, and contact information for reference.
2. Transaction Summary: A breakdown of financial transactions during the specified period, including invoices issued, payments received, and any adjustments made.
3. Invoices: A list of invoices generated for products or services rendered, indicating amounts due and payment due dates.
4. Payments: Information on payments received, including dates, amounts, and methods of payment.
5. Credits and Adjustments: Any adjustments or credits applied to the account, such as returns, discounts, or corrections. If Any advance payment is done, its also shown as “Unadjusted Amount”
6. Outstanding Balances: The remaining amount owed by the account holder, including a detailed breakdown of outstanding invoices.

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Importance of Statement of Account

A Statement of Account holds significant importance for businesses and individuals alike:

Financial Transparency

It provides a clear and transparent overview of financial transactions, fostering trust and accountability between parties.

Record Keeping

It serves as an organized record of financial interactions, simplifying auditing and reconciliation processes.

Payment Tracking

Businesses can track and follow up on outstanding payments promptly, ensuring a healthy cash flow.

Dispute Resolution

In case of discrepancies or disputes, a well-documented Statement of Account can help resolve issues efficiently.

Supplier Statement of Account

A Supplier Statement of Account is a crucial financial document that outlines the transactions, balances, and interactions between a business and its suppliers over a specific period. This document provides a comprehensive overview of the financial relationship between the buyer and the supplier, helping both parties track and manage their accounts efficiently. The details contained in a Supplier Statement of Account typically include:

1. Supplier Information: The name, contact details, and account number of the supplier for easy identification.
2. Transaction Summary: A summary of all transactions conducted between the buyer and the supplier during the specified period. This includes invoices, payments, credits, and any adjustments.
3. Invoices: A list of invoices issued by the supplier for products or services delivered. Each invoice will detail the invoice number, date, description of goods/services, quantities, unit prices, and total amount due.
4. Payments: Information about payments made by the buyer to the supplier, including the payment dates, methods of payment, and reference numbers.
5. Credits and Adjustments: Any adjustments, credits, or refunds applied to the account, such as returns, discounts, or corrections.
6. Outstanding Balances: The remaining balance owed by the buyer to the supplier, broken down by each outstanding invoice. This helps the buyer understand which invoices are still unpaid.
7. Terms and Conditions: Relevant terms and conditions that govern the financial relationship between the buyer and the supplier, including payment terms, credit limits, and any applicable penalties.
8. Aging of Invoices: A breakdown of the outstanding invoices based on their aging categories, such as current, 30 days overdue, 60 days overdue, and so on. This helps both parties identify overdue payments and take appropriate actions.
9. Contact Information: Contact details for the supplier’s accounts receivable department or relevant personnel, making it easier for the buyer to communicate regarding any discrepancies or inquiries.
10. Statement Date: The date on which the Supplier Statement of Account was generated, ensuring accuracy and clarity of the information.

A Supplier Statement of Account serves as a vital tool for maintaining transparency and open communication between a business and its suppliers. It allows both parties to reconcile their records, resolve any discrepancies, and ensure that financial interactions are accurately recorded. This document facilitates efficient financial management, helps prevent misunderstandings, and strengthens the business relationship between the buyer and the supplier.

Customer Statement of Account

A Customer Statement of Account is a crucial financial document that provides a comprehensive overview of the financial interactions and transactions between a business and its customers over a specific period. This document serves as a summary of the customer’s financial relationship with the business, helping both parties track and manage their accounts efficiently. The details contained in a Customer Statement of Account typically include:

1. Customer Information: The name, contact details, and account number of the customer for easy identification.
2. Transaction Summary: A summary of all financial transactions between the customer and the business during the specified period. This includes invoices issued, payments received, credits, and any adjustments.
3. Invoices: A list of invoices issued by the business to the customer for products or services provided. Each invoice includes details such as the invoice number, date, description of goods/services, quantities, unit prices, and the total amount due.
4. Payments: Information about payments received from the customer, including payment dates, methods of payment, and reference numbers.
5. Credits and Adjustments: Any adjustments, credits, or refunds applied to the customer’s account, such as returns, discounts, or corrections.
6. Outstanding Balances: The remaining balance owed by the customer to the business, broken down by each outstanding invoice. This helps the customer understand which invoices are still unpaid.
7. Aging of Invoices: A breakdown of the outstanding invoices based on their aging categories, such as current, 30 days overdue, 60 days overdue, and so on. This helps both parties identify overdue payments and take appropriate actions.
8. Terms and Conditions: Relevant terms and conditions that govern the financial relationship between the business and the customer, including payment terms, credit limits, and any applicable penalties.
9. Contact Information: Contact details for the business’s accounts receivable department or relevant personnel, making it easier for the customer to communicate regarding any discrepancies or inquiries.
10. Statement Date: The date on which the Customer Statement of Account was generated, ensuring accuracy and clarity of the information.

A Customer Statement of Account is an essential tool for maintaining transparency and open communication between a business and its customers. It allows both parties to reconcile their financial records, address any discrepancies, and ensure that financial interactions are accurately recorded.

What is Day Book Format? Explain with an Example.

A Day Book, also known as a Daily Book or Journal, is a record that captures daily financial transactions in chronological order before they are posted to ledger accounts. It serves as the first step in the accounting process, where transactions are initially recorded. Here’s an explanation and an example of a simple day book format:

Day Book Format:

Date	Account Name	Debit (DR)	Credit (CR)
YYYY-MM-DD	Account 1	Amount
YYYY-MM-DD	Account 2		Amount
YYYY-MM-DD	Account 3	Amount

Example of Day Book Entries:

Let’s consider a retail store’s day book for a single day:

• On July 15, the store sold merchandise for $500 in cash.
• They also purchased inventory worth $300 on credit from a supplier.

Day Book Entries:

Date	Account Name	Debit (DR)	Credit (CR)
2023-07-15	Cash	$500
2023-07-15	Sales Revenue		$500
2023-07-15	Inventory	$300
2023-07-15	Accounts Payable		$300

In this example, the day book records the cash sale with a debit to the Cash account and a credit to the Sales Revenue account. Similarly, the purchase of inventory on credit is recorded with a debit to the Inventory account and a credit to the Accounts Payable account. These entries are then posted to the respective ledger accounts for further processing in the accounting system.

Benefits of a Statement of Account

A Statement of Account offers several benefits to businesses:

Efficient Financial Management

It enables businesses to monitor their financial health, identify trends, and make informed decisions based on accurate data.

Customer Relationships

Providing regular Statements of Account enhances customer satisfaction by keeping them informed about their financial standing and transactions.

Streamlined Operations

It streamlines internal processes, allowing businesses to allocate resources effectively and prioritize tasks.

Compliance and Documentation

It aids in compliance with tax regulations and financial reporting standards by maintaining organized financial records.

Improved Cash Flow

Timely and accurate Statements of Account help optimize cash flow management, reducing the risk of late or missed payments.

FAQ on Statement of Account

1. What is Statement of Account? What is SOA?

A Statement of Account (SOA) is a financial document that provides a summary of transactions between a customer and a supplier over a specific period. It outlines the details of invoices, payments, credits, and debits related to a particular account. SOAs are commonly used in business-to-business (B2B) relationships to keep both parties informed about their financial interactions.

2. What is a bank statement of account?

A bank statement of account is a document provided by a bank, detailing transactions, balances, and activities related to a customer’s bank account.

3. How to make a statement of account?

A statement of account can be generated using accounting software or templates, compiling transaction data, invoices, and payment details for the specified period.

4. What is a liquidator’s final statement of account?

A liquidator’s final statement of account is a financial report prepared by a liquidator, summarizing the liquidation process and distribution of assets to creditors.

5. Who issues a statement of account?

Statements of Account are typically issued by businesses, financial institutions, or service providers to their customers, clients, or account holders, outlining financial interactions and balances.

A Statement of Account serves as a vital tool for maintaining financial transparency, managing transactions, and fostering strong business relationships.

6. What is Run Book Meaning?

A Run Book, also known as an Operations Manual or Playbook, is a comprehensive document that contains detailed instructions and procedures for maintaining, operating, and troubleshooting a system, application, or process. It serves as a reference guide for IT operations, ensuring consistency and efficiency in managing systems and resolving issues.

7. Outstanding Balance Meaning?

An Outstanding Balance refers to the amount of money that remains unpaid or unsettled on an account. It can pertain to various financial contexts, such as unpaid bills, credit card balances, or accounts receivable. The outstanding balance represents the sum of all transactions yet to be cleared, including both debits and credits.

8. Company Account Meaning?

A Company Account refers to a record maintained by a business entity to track its financial activities. It encompasses all financial transactions, including revenues, expenses, assets, liabilities, equity, and more. A company account provides a comprehensive view of the organization’s financial position and performance.