Rules for determining a cash or credit transaction

Often students get confused in deciding about the nature of a transaction i.e. cash or credit. These points can guide those students. Signs of Cash Transaction (i) All transactions in which the word ‘Paid’ is mentioned are termed as “Cash Transactions “e.g. Rent paid, Salaries paid etc. (ii) All transactions in which the words “Cash … Read more

Business transactions and its classification

Business Transaction Definition A transaction (also termed as a business transaction and financial transaction) may be defined as an exchange of value. In a business environment, it is an exchange of goods or services at a particular price. Every transaction changes the financial position of a business and therefore must be recorded in the books of … Read more

Classification of accounts

Accounts are classified using two approaches – traditional approach (also known as British approach) and modern approach (also known as American approach). On this page, we shall briefly discuss the classification of accounts under both the approaches. Classification of accounts under traditional or British approach According to traditional approach or British approach, the accounts are classified … 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 starts with the analysis of transactions. A proper analysis of business transactions is very important to make a correct journal entry. Steps of transaction analysis Analysis of business transactions is a mental process which includes the following four steps: Ascertaining the accounts involved in the transaction Ascertaining the nature of accounts involved in the … Read more

Transaction analysis – MCQs

Take a quick Multiple Choice Questions (MCQs) test about Transaction analysis. These MCQs can help you to prepare for your exams, interviews and different tests. Just click the “start quiz” button and start Transaction analysis MCQs quiz. If you find difficulty in answering these questions, read ‘Transaction analysis‘ chapter thoroughly from explanation section of the … Read more