Question

Which of the following best defines a transaction in accounting?

• A. A social event
• B. An economic event involving value between two or more entities
• C. A natural disaster
• D. An employee meeting

Answer 1

Answer:

B. An economic event involving value between two or more entities

BASIC TERMS OF ACCOUNTING:

1. Entity - Business entity means a specifically identifiable business enterprises like Wipro, Reliance Industries Ltd, Kalyan silks

2. Transaction - The term transactions means a financial transactions or economic events involving some value between two or more entities.

E.g. purchase of goods, payment of salary, receipt of money

There are two type of Business transactions

1. Cash transactions - Immediate payment or receipt of cash, settled immediately.

2. Credit transactions - Payment or receipt of cash in result of a transaction is postponed to a future date .