Transactions
Transactions
Source Documents which we discussed are the original sources of information that provide documentation proof that a transaction has occurred and include sales invoices, invoices from suppliers, contracts, checks written and checks received , bank payments and receipts, promissory notes, and various other types of business documents.These documents provide us with the information needed to record our financial transactions in our bookkeeping records namely journals and ledgers.
In a typical business transaction we get something and we give up something.
There are several types of bookkeeping transactions that occur in a business. Here are some common examples:
1. Sales Transactions: These transactions involve recording revenue from the sale of goods or services to customers. They can be cash sales or sales made on credit, and they typically involve debiting the Accounts Receivable or Cash account and crediting the Sales account. In addition the Cost Of Goods Sold account is debited and the Inventory account is credited when using a perpetual inventory system.
2. Purchase Transactions: These transactions involve recording expenses incurred from purchasing goods or services for the business. They can be cash purchases or purchases made on credit, and they typically involve debiting an Inventory or Expense account and crediting the Accounts Payable or Cash account.
3. Cash Transactions: These transactions involve recording the inflow or outflow of cash in the business. Examples of cash inflows include customer cash sales, collections on accounts, and miscellaneous receipts. Examples of cash outflows include supplier cash payments, payments on account, and miscellaneous cash expenses. Cash receipts are debited to the Cash account while cash payments are credited to the Cash account.
4. Payroll Transactions: These transactions involve recording employee wages, salaries, and related payroll expenses. They typically involve debiting various expense accounts, such as Salaries Expense and Payroll Taxes Expense, and crediting the Cash or Accrued Payroll account.
5. Loan Transactions: These transactions involve recording loans received from financial institutions or other entities and recording the associated payments. THe loan receipt involves debiting the Cash account and crediting a Loan Payable account. Loan payments debit the Loan Payable account and credit the Cash account.
6. Expense Transactions: These transactions involve recording various expenses incurred in the business, such as rent, utilities, office supplies, and advertising. They typically involve debiting the respective expense accounts and crediting the Cash or Accounts Payable account, depending on whether the expense is paid in cash or on credit.
Transactions