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What is an Account Statement and what are its contents?
A statement of account or account statement is a document that enlists transactions between a buyer and a seller. It is a summary of all transactions that take place within a specified period. Business managers use account statements to learn the productivity of their efforts and account statements are a great tool to measure productivity.
In the case of businesses, the value of changing items is reflected in the account statements. The account statements offer an opportunity to business managers to re-check the general ledger when there is an unsettled balance in it. This would reveal the reason for not including a transaction. Similarly, if there is an overstatement, business managers can check the statements if an account has been double-entered.
Contents of an Account Statement
Although Account Statements may vary from one to another, there are some common contents in every account statement. The following are the contents of account statements.
Header with business details
This includes the name of businesses, contact information of the buyer and seller, email and phone numbers.
Brief Account Summary
This may include −
The cash due from the previous balance or opening balance,
The amount of the invoice,
The amount paid, and
The balance due.
Table with detailed transactions
This is the main part of an account statement which includes −
The invoiced amount that has been paid,
The amount unpaid or payable by the buyer,
Date of transaction, and
How Are Account Statements Useful?
Account statements tell about the valuable transactions (Paid and unpaid) so that they can stay aware of which transactions have been made and which have not been paid yet. This helps them make valuable decisions. Additionally, they reveal overall overhead costs and fees associated, if any.
Account statements offer other valuable information such as credit score and time left to pay the invoice amount too. This keeps the business managers aware of expenses that have to be made within a certain period.
Signs of Danger
There may be some signals of wrongdoing in the statement of accounts that show over-expenses or identity theft. For example, credit card owners may notice a huge expense in luxury items suddenly. This is due to identity theft. Anomalies regarding unethical business practices may be decipherable from account statements too.
Points to Note
Account statements show the transactions between a buyer and a seller.
The Table with detailed transactions is the main part of an account statement.
Account statements can come with some red flags in case of anomalies or fraudulent use of others' assets.
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