Rules for Determining a Cash or Credit Transaction

Deciding whether a transaction involves cash or credit can often confuse students. The following pointers will help to alleviate any confusion. Features of Cash Transaction (i) All transactions in which the word “paid” is mentioned are deemed cash transactions (e.g., rent paid, salaries paid, and so forth) (ii) All transactions in which the words “cash or cheque” … Read more

Business Transactions and Their Classification

Business Transactions: Definition A transaction (also termed a business transaction or financial transaction) refers to an exchange of value. In business, a transaction is an exchange of goods or services at a particular price. Every transaction changes the financial position of a business. For this reason, all transactions must be recorded in the books of … Read more

Classification of Accounts

Accounts are classified using two approaches: Traditional approach (also known as the British approach) Modern approach (also known as the American approach) This article briefly discusses how accounts are classified under both approaches. Classification of Accounts Under the Traditional (or British) Approach According to the traditional approach, accounts are classified into three types: real accounts, … Read more

Rules of Debit and Credit

There is no standard definition for Debit & Credit. If we go into history we would find that the word Debit had been derived from the Latin word “Debere” which means “To owe” which ultimately was shortened to “Dr.” Similarly, Credit had been derived from the Latin word “Credere” meaning “On which one believes” and … Read more

Analysis of Business Transactions

The accounting cycle begins with the analysis of transactions. The proper analysis of business transactions is important because it ensures that entries in the journal are correct. What are the Steps of Transaction Analysis? Analysis of business transactions involves the following four steps: Ascertaining the accounts involved in the transaction Ascertaining the nature of the … Read more

Transaction Analysis MCQs

Take this short test on transaction analysis to help you prepare for your exams and interviews. To begin, simply click the “Start Quiz” button below. If you find it difficult to answer any of these multiple choice questions (MCQs), you can read this short article on transaction analysis. You can also check: Transaction analysis short … Read more