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TRANSACTIONS

Posted on November 18, 2019 By commerceiets No Comments on TRANSACTIONS

Table of Contents

  • TRANSACTIONS
      • FEATURES OF TRANSACTION
      • TYPES OF TRANSACTION

TRANSACTIONS

Transactions refer to any exchange of goods and services on cash or credit basis by the business with the outside parties i.e. other business or customer. Transaction is an economic activity. It has an effect on the net worth or financial position of the business.

FEATURES OF TRANSACTION

The following are the features of transaction:

ECONOMIC ACTIVITY

Transaction is an economic activity. It includes the dealing such as purchase and sale of goods, lending or borrowing money etc. It does not include any kind of social activity such as inviting a friend to dinner or giving money as gift on some occasion.

IMPACT ON FINANCIAL POSITION

Transaction has a great bearing on the financial position of the firm. Each transaction may have little or great impact on the financial position of the firm. It results in either inflow or outflow of cash and inflow or outflow of goods and services.

MAY BE QUANTITATIVE OR QUALITATIVE

Transaction may be quantitative or qualitative. Quantitative transactions are those that involve the exchange of money. Example: purchase of furniture worth Rs. 5,000 for cash.

On the contrary, qualitative transactions are those that involve no exchange of money. Example: Depreciation or decrease in the value of the asset.

FINANCIAL CHANGE

Transaction brings financial change for the business or parties. Only that event is regarded as transaction that impacts the financial position. Example: Death of a debtor turns the amount due from him/her into bad debt, which is a monetary loss, hence regarded as transaction.

On the other hand, death of an inefficient employee leads to no monetary loss, hence not regarded as transaction.

TYPES OF TRANSACTION

The following are the various types of transactions:

TYPES OF TRANSACTION

ON THE BASIS OF PAYMENT INVOLVED

CASH TRANSACTION: Cash transaction involves the inflow and outflow of the cash between the two parties. Example: Purchase of furniture worth Rs, 10,000 is a cash transaction as it involves payment of Rs. 10,000 in the form of cash.

CREDIT TRANSACTION: Credit transaction is the transaction that does not includes cash payments or receipts. It involves payment or receipt of cash on any future date. Example of credit transactions are:

  • Purchase of goods on credit.
  • Supply of goods on credit.

ON THE BASIS OF ENTITY INVOLVED

EXTERNAL TRANSACTION: These transactions are entered into with the parties that are external to the business. Example: sale of goods to customer.

INTERNAL TRANSACTION: These transactions are entered into within the organization of between the different departments of the organization. Example: Depreciation on machinery, supply of goods from department to another.

ON THE BASIS OF EXCHANGE

EXCHANGE TRANSACTION: These transaction leads to inflow or outflow of something. Example: Purchase of land. This leads to inflow of an asset i.e. land and outflow of cash.

NON-EXCHANGE TRANSACTIONS: This is one way transaction. It does not involve any kind of inflow or outflow. Example: Depreciation on machinery.

Also StudyAlso StudyAlso StudyAlso Study
AccountingNon profit organisationDepreciationLiquidity ratios
Nature of AccountingReceipts and Payments AccountDepreciation AccountingAcid Test Ratio
Benefits of AccountingScope of accountingHire Purchase AccountingCash Ratio
Difference between cost accounting and financial accountingFinancial accounting, cost accounting and management accountingDifference between hire purchase and instalment systemFinancial ratio analysis
Difference between transaction and eventTransactionsUsers of AccountingRatio analysis
Limitation of AccountingCapital ExpenditureInstalment SystemDifference between consignment and sale
Book KeepingRevenue ExpenditureReserves AccountingAbnormal loss vs normal loss in consignment
AccountancyDifference between capital and revenue expenditureProvisions Treatment of loss on consignment
Accounting as science or an artAccounting EquationSingle entry systemAccounting treatment of consignment
Book Keeping vs accountingDeferred Revenue ExpenditureDifference between statement of affairs and balance sheetJoint venture vs consignment
Book keeping vs accountancyCapital receiptIFRSDepartmental Accounting
Accounting vs accountancyRevenue receiptBalance SheetMethods of departmental accounting
Basis of AccountingDifference between capital and revenue receiptProfit and loss AccountAllocation of expenses in departmental accounting
Branches of accountingDifference between accounting concepts and conventionsTrading AccountInter-departmental transfers
Cash and mercantile system of accountingAccounting StandardsVoyage AccountDifferent types of branches
Accounting PrinciplesObjectives of AccountingAccounting for Incomplete VoyageDepartmental vs Branch accounting
Golden ru les of accountingProcess of AccountingJoint ventureMethods of branch accounting
Double entry system of book keepingScope of AccountingJoint Venture Vs PartnershipIncorporation of branch trial balance
Double entry vs Single entry systemAccounting Concepts vs Accounting conventionsMethods of recording transactions in Joint VentureGarner VS Murray Rule
History of AccountingDifference between provisions and reservesConsignment
CONNECT ON LINKEDIN
11 ACCOUNTANCY, FINANCIAL ACCOUNTING

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  • 11 ACCOUNTANCY
  • 12 ACCOUNTANCY
  • BCOM GNDU NOTES
  • BUSINESS MANAGEMENT
  • BUSINESS ORGANISATION
  • BUSINESS STATISTICS
  • COMMERCIAL LAW
  • CORPORATE ACCOUNTING
  • CORPORATE OR COMPANY LAW
  • COST ACCOUNTING
  • DIRECT TAX LAWS
  • FINANCIAL ACCOUNTING
  • FINANCIAL MANAGEMENT
  • FINANCIAL MARKET OPERATIONS
  • GOODS AND SERVICE TAX
  • INDUSTRIAL AND LABOUR LAWS
  • INTERNATIONAL BUSINESS
  • KEY DIFFERENCES
  • MANAGEMENT ACCOUNTING
  • MANAGERIAL ECONOMICS
  • MICRO ECONOMICS
  • OPERATIONS RESEARCH
  • PARTNERSHIP ACCOUNTS
  • RISK MANAGEMENT AND INSURANCE

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