Comprehend the Basics of Explanations of Transactions with Myhomeworkhelp.com
In accounting, it is essential to understand transactions and how it affects the business. Transactions are an important part of maintaining and running a successful business organisation and an adept accounting department. If you do not have a clear understanding of its implications, then it would be difficult to handle any journal entry related to. Explanations of transactions homework help from us at myhomeworkhelp.com help resolve this problem.
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How is a transaction in accounting defined?
Transaction is defined as the agreement between the buyer and the seller where goods, financial instruments or services are exchanged. Transactions in accounting are usually a two part system as it involves giving money and receiving of goods. These are recorded in a journal in a chronological fashion which you can understand successfully with explanations of transactions assignment help.
What are the types?
In accounting, there are essentially four types of transactions that take place. Each of these plays an important role in the organisation as each of it defines the success and failure of the organisation as far as finances are concerned. With explanations of transactions homework help, you can understand its implications better. These four types are:
- Sales
- Payments
- Purchases
- Receipts
What is the accounting equation?
Accounting equation plays a vital role as far as financial transactions are concerned. Every transaction abides by the principle of the accounting equation. It states that in any financial transaction, the assets should be equal to the liabilities plus the shareholder’s equity. It can be better illustrated with examples as listed below which you can comprehend with explanations of transactions assignment help:
- Purchasing a product from a supplier results in the decrease of in cash and an increase in expenses.
- Borrowing results in an increase in cash, i.e. assets and an increase in a loan payable that is a liability.
- Selling to a customer increases the assets along with an increase in equity.
How are transactions recorded?
All transactions are recorded as per the double entry system. However, the process differs depending on whether an organisation opts for accrual or cash accounting. In accrual accounting, transactions are recorded when a revenue or expense is incurred. In cash accounting, a transaction is recorded when there is income or expenditure of money.
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