Analysing Business Transactions
What is a business transaction?
A business transaction is an event in which two or more parties exchange goods,
money, or services. The transaction can be as simple as a cash purchase or as
complex as a multi-year service contract. The transaction can be between two persons
who are engaged in business and performing it for mutual gain, or between a
commercial entity and a customer, such as a retail shop.
A business transaction has an impact on a company's resources or the source of its
assets. It's also an activity that involves a shift of perspective. A transaction usually
comprises a value received and a value given up.
When the transaction is between a business and an outsider, it is called an external
transaction. An example of it is a purchase of office supplies from National Bookstore.
Transactions that happen within the business that do not involve outsiders are called
internal transactions. An example of it is office supplies being used daily in the
operations of the business.
What is a source document?
A transaction between a company and a third party is referred to as an external
transaction. A purchase of office supplies from National Bookstore is an example of this.
Internal transactions are those that take place within a company and do not involve
outsiders. Office supplies, for example, are needed on a regular basis in the business's
activities.
Transactions may be classified as:
• Exchange transactions involve physical exchange include things like buying, selling,
collecting receivables, and paying bills.
• Non-exchange transactions are occurrences that do not involve physical exchanges
but do entail determinable changes in monetary values, such as equipment wear and
tear, fire loss, typhoon loss, and so on.
Analyzing Business Transaction: Source Documents
To qualify as an accountable/recordable business transaction, the activity or event
must:
What is a business transaction?
A business transaction is an event in which two or more parties exchange goods,
money, or services. The transaction can be as simple as a cash purchase or as
complex as a multi-year service contract. The transaction can be between two persons
who are engaged in business and performing it for mutual gain, or between a
commercial entity and a customer, such as a retail shop.
A business transaction has an impact on a company's resources or the source of its
assets. It's also an activity that involves a shift of perspective. A transaction usually
comprises a value received and a value given up.
When the transaction is between a business and an outsider, it is called an external
transaction. An example of it is a purchase of office supplies from National Bookstore.
Transactions that happen within the business that do not involve outsiders are called
internal transactions. An example of it is office supplies being used daily in the
operations of the business.
What is a source document?
A transaction between a company and a third party is referred to as an external
transaction. A purchase of office supplies from National Bookstore is an example of this.
Internal transactions are those that take place within a company and do not involve
outsiders. Office supplies, for example, are needed on a regular basis in the business's
activities.
Transactions may be classified as:
• Exchange transactions involve physical exchange include things like buying, selling,
collecting receivables, and paying bills.
• Non-exchange transactions are occurrences that do not involve physical exchanges
but do entail determinable changes in monetary values, such as equipment wear and
tear, fire loss, typhoon loss, and so on.
Analyzing Business Transaction: Source Documents
To qualify as an accountable/recordable business transaction, the activity or event
must:
