Question

List five types of transaction that might be entered into an accounting system.

Answer 1

Types of transactions that can be entered into an accounting system :

i) External transactions : This involves trading of goods & services for money. It is entered between two persons or organisations. It is also called business transaction. Example, purchase and sales.

ii) Internal transactions : This does not involve trading of goods & services but other process within organisations. This includes depriciation or salary, etc.

iii) Cash transactions : Transactions, which refer to those that are dealt with cash. Example office supplies, other cash transactions, etc.

iv) Credit transactions : They are unrelated to cash transactions because payment is made at future date. Example, credit sales for 30 days, 60 days or 90 days.

v) Visible transactions : It is also called real transactions because it involves real assets such as machinery, tool and furniture.

vi) Invisible transactions : Such transactions can not be seen. It includes discount, depriciation and interest.