Every financial journey begins with identifying business transactions — the essential building blocks of your accounting system. A business transaction refers to any economic event that has a direct financial impact on your company’s accounts and can be measured reliably.
In simple terms, if money, goods, or services are exchanged between your business and another party (be it a customer, supplier, lender, or employee), it qualifies as a transaction and must be recorded.
Common Types of Business Transactions:
Sales Revenue: When you sell a product or service to a customer.
Expenses: Paying salaries, utility bills, rent, or marketing costs.
For a detailed and comprehensive understanding of identifying transactions as the foundation of the accounting cycle, please refer to the link below. The full video provides clear explanations and will help resolve any doubts you may have regarding the topic.
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| https://youtu.be/JMOqA48JWzg?si=fRQClQAbpRz-Jm9- |
3 Comments
Excellent walk-through of the full cycle. I liked how you included examples for each step — especially the closing entries.
ReplyDelete"I didn’t realize how important this first step is—thanks for the insight."
ReplyDeleteIt really sets the foundation—happy to share!
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