Accounting transactions are business activities that impact on the financial statements.
Transactions can take many forms.
Cash Transactions are sales or purchases, paid for by cash, cheque, card payment or other method.
Simply recorded as one of the following:
- debit purchases, credit bank or cash
- credit sales, debit bank or cash
Credit Transactions are when sales or purchases are made on credit meaning payment will follow at a later date.
Recorded in two parts. An entry when goods or services are billed and another when it is paid.
- debit purchase, credit supplier account
- debit supplier account, credit bank
- credit sales, debit customer account
- credit customer account, debit bank
Other types of transactions might include movement of funds such as loans and loan repayments, purchases or assets.
A business owner is legally required to keep a record of all business transactions.
Having a system in place will make recording transactions quick and easy.