How to Record Transactions and Prepare Financial Statements: A Guide for Future Accounting Professionals

Learning how to record transactions and prepare financial statements is a critical skill for anyone getting into accounting or bookkeeping. Mastering these skills is essential to maintaining the financial well-being and growth of an organization.

At New Brunswick College of Healthcare, Business and Technology (NBBT College), our Practical Accounting program aims to prepare students with actual skills needed for their future careers by offering them plenty of practical experience throughout the course.

Let’s dive into the blog in which we will understand what these processes involve and why they matter.

Why Are Recording Transactions and Financial Statements Important?

A business is like a puzzle that must be put together from various pieces of information like sale, expense, loan, or invoice. Each transaction fits into the bigger picture of your business. Properly recording transactions leads to a comprehensive view of your business’ financial activity known as the financial statements.

Here’s why this is crucial:

• Tracks business performance
• Helps with decision-making
• Ensures CRA compliance
• Demonstrates credibility to financial institutions, investors and board members.

Step 1: Recording Transactions

This is the first stage in the accounting cycle. It involves capturing all financial activities of a business, from purchasing office supplies to collecting customer payments.

This process occurs at the beginning of the accounting cycle. The process records and documents every financial transaction relevant to the business from purchasing office supplies to collecting customer payments.

Common Types of Transactions

• Sales and revenue
• Purchases and expenses
• Payroll and taxes
• Bank deposits and withdrawals
• Owner’s equity contributions or drawings

How Are Transactions Recorded?

All transactions are first entered in journals using the double-entry accounting system, so every transaction affects at least two accounts: one debit and one credit.

Example:

A business purchases office equipment for $1,000 in cash.

• Debit: Office Equipment (Asset) – $1,000
• Credit: Cash (Asset) – $1,000

The entries from journals are summarized in the general ledger, providing accounts for the various expenses and income items (like rent, salaries, or sales).

Step 2: Preparing Financial Statements

Next, you should generate the financial statements using the data collected from the summarized transactions. They summarize important information about the organization’s finances.

The 3 Key Financial Statements You’ll Learn at NBBT

a. Income Statement (also called Profit & Loss Statement)

Purpose: Shows the company’s revenues and expenses over a period.

Tells You: Did the business make a profit or a loss?

Formula:

Revenue – Expenses = Net Income (or Loss)

b. Balance Sheet

Purpose: Describes a business’s assets, liabilities and shares listed on a specific point in time.

Tells You: Is the business financially healthy?

Formula:

Assets = Liabilities + Owner’s Equity

c. Cash Flow Statement

Purpose: Reveals how cash moves into and out of the company.

Tells You: Does the business have sufficient cash to run smoothly?

This statement is necessary for preparing budgets, submitting business loan applications and making investment decisions.

Begin your career with NBBT College and ensure you always have valuable skills to offer in the job market.

Tools You’ll Learn to Use at NBBT College

We don’t just teach theory — we train students to use industry-standard accounting software, so you’re ready for the business workforce.

You’ll get hands-on practice with:

• QuickBooks
• Sage 50
• Microsoft Excel for financial modeling

Plus, students apply knowledge gained during the program to the real-life business situations. By this you are not just learning – you are doing.

Who Should Learn This?

The ability to record transactions and prepare financial reports is essential for:

• Aspiring Bookkeepers
• Future Accounting Technicians
• Entry-level Finance Clerks
• Professionals who take responsibility for the financial operations of their own small businesses.
• Career changers looking for a stable, in-demand job

Why Choose NBBT College?

Our Practical Accounting program aims to deliver training that's:

• Real-world applications
• Instructor-led, hands-on training
• Current Canadian accounting standards
• We offer assistance to newcomers and individuals of all ages
• You can choose to take classes online or in person at times that work for you

We support both beginners and those wanting to advance their skills in the field of accounting.

Final Thoughts

Practice makes perfect when it comes to recording transactions and creating financial statements. Become skilled in them by which you can open the door to a variety of rewarding careers in accounting, administration, and business management.

Ready to Get Started? Learn more about our Diploma programs offered at NBBT College or book a call with our admissions team to explore your options.