Accounting Transaction

Any activity which effects the financial position of business is called transaction. For Example: Purchase of Goods, Sale of Goods, Paid Rent, Paid salary, Purchase machinery

An accounting transaction is  a business event having a financial impact on the monetary statements of a business. it's recorded within the accounting records of the business. samples of accounting transactions are:

Cash sale to a client

Sale on credit to a client

Receive profit payment of Associate in Nursing invoice owed by a client

Purchase mounted of assets from a provider/supplier 

Record the depreciation of a asset over time

Purchase expendable provides from a provider

Investment in another business

Investment in marketable securities

Borrow funds from a investor

Issue a dividend to investors

Sale of assets to a third party

Every transaction must follow the dictates of the accounting equation, that states that any transaction should end in assets equaling liabilities and shareholders' equity. as an example:

A sale to a client leads to a rise in assets and a rise in revenue (indirectly will increase stockholders' equity).

A purchase from a provider leads to a rise in expenses (indirectly decreases stockholders' equity) and a decrease in money (asset).

A receipt of money from a client end in a rise in cash (asset) and a decrease in assets (asset).

Borrowing funds from a investor leads to a rise in money (asset) and a rise in loans owed (liability).

Thus, each transaction leads to a balanced accounting equation.

Accounting transactions are either directly or indirectly recorded with a journal entry. The indirect selection is made once you use a module within the accounting software system to record a group action, and therefore the module creates the journal entry for you. For example, the request module within the accounting software system can debit the assets account and credit the revenue account each time you produce a client invoice.

If a journal entry is made directly in a very manual method of accounting, verify that the total of all debits equals the total of all credits, or the group action are unbalanced, that makes it not possible to form monetary statements. If a journal entry is made directly in Associate in Nursing accounting software system package, the software system can refuse to simply accept the entry unless debits equal credits.