Accounting Records: Definition, What They Include, and Types

Accounting Records

Investopedia / Eliana Rodgers

What Are Accounting Records?

Accounting records are all of the documentation and books involved in the preparation of financial statements or records relevant to audits and financial reviews. Accounting records include records of assets and liabilities, monetary transactions, ledgers, journals, and any supporting documents such as checks and invoices.

Key Takeaways

  • Accounting records are all of the documents involved in preparing financial statements for a company.
  • Certain regulatory bodies require companies to keep their accounting records for several years in the event that they need to be reviewed.
  • Accounting records are often reviewed for audits, compliance checks, or other business related necessities.
  • Types of accounting records include transactions, general ledgers, trial balances, journals, and financial statements.

Understanding Accounting Records

Rules and laws are generally in place to force accounting entities and accounting firms to retain accounting records for a specified period of time. In the U.S., the Securities and Exchange Commission (SEC) requires that accounting firms retain records from audits and reviews for at least seven years and that they retain any records that support or cast doubt on the conclusions of an audit.

There is no universal agreement as to which collection of business documents comprise a comprehensive set of accounting records. Accounting records can be thought of as a catch-all term. Different parties, such as creditors, equity investors, or groups interested in corporate governance will have different, and often competing priorities; their demands or preferences for documentation will continuously change.

At different points in the economic or business cycle, parties demanding accounting records will alter their request for information based on the position in a cycle. For instance, at the start of an upswing in a business cycle, requests for financial statements might be strong, as equity investors are bullish. In contrast, during a dip in a business cycle, creditors might require more details surrounding balance sheet items, as they become more hesitant to extend credit.

In short, accounting records and even methods of accounting are continuously evolving to keep pace with the changing nature of business and the information demands of interested market participants.

Types of Accounting Records

Accounting records generally come in two forms: single entry and double entry. By its name, single entry is a much simpler method, which works better for smaller operations. The double entry method is more complex and requires two entries, one credit and one debit, for every transaction a business makes. The goal is to balance the books and account for the movement of cash through an organization. This is primarily done in larger corporations, which helps with spotting errors and potential fraud.

The specific types of accounting records that are reviewed consist of the transactions, journals, general ledgers, trial balances, and financial statements of a company.


The transaction is the starting point for any accounting record. It is the catalyst for the entire process that shows any item bought or sold, depreciated, etc., that a business transacts.


Journals record all of the transactions that are made by a company. Journals can cover all of the entire transactions of a company or there can be different journals for different areas of the firm. The only necessity is that journals are kept up to date and that all the transactions are recorded in some manner.

General Ledgers

The general ledger is the movement of transactions in the journal to designated places in the general ledger that are outlined by the type of transaction. This makes it easier to comb through the transactions and categorize them correctly in the preparation of the trial balance and ultimately the financial statements.

Trial Balances

The trial balance is the summation of all credits and debits within the business cycle. Once this step has been completed, all entries should balance out. If they do not, this can reveal an error that must be corrected or possible fraud. It will be crucial to determine the disconnect.

Financial Statements

The financial statement is the final piece of document that comprises the components of all the other accounting documents. The financial statements are what will be provided to the public and to regulatory bodies for viewing. Investment analysts can review the financial statements to arrive at their thoughts on the company. Regulatory bodies can request the accounting documents that the financial statements were generated from to gain a deeper understanding of the company.

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