What Are the Three Main Types of Bank Transactions

What Are the Three Main Types of Bank Transactions.

What are Accounting Transactions?

Accounting transactions refer to whatsoever business action that results in a direct upshot on the fiscal status and financial statements of the business. Such transactions come in many forms, including:

  • Sales in cash and credit to customers
  • Receipt of cash from a client past sending an invoice
  • Purchase of fixed assets and movable avails
  • Borrowing funds from a creditor
  • Paying off borrowed funds from a creditor
  • Payment of greenbacks to a supplier from a sent invoice

Accounting Transactions

Information technology is imperative to call back that every transaction should show the balance betwixt the assets and the liabilities, or the debit and the credit, such that a receipt of cash from a customer equals an increment in revenue or that a purchase from a supplier equals an increment in expenses and a decrease in cash.

Types of Accounting Transactions based on Institutional Human relationship

The types of accounting transactions may be based on various points of view. The kickoff one that we volition discuss is the types of accounting transactions co-ordinate to institutional relationships, namely external and internal transactions.

one. External transactions

These involve the trading of goods and services with money. Therefore, it can be said that any transaction that is entered into by two persons or 2 organizations with one buying and the other one selling is considered an external transaction. It is also chosen a business transaction.

Example: If Company A buys raw materials for its production from Company B, then this is called an external transaction.

2. Internal transactions

They don’t involve any sales but rather other processes within the organization. This may include computing the salary of the employees and estimating the depreciation value of a certain asset.

Types of Bookkeeping Transactions based on the Commutation of Greenbacks

Based on the substitution of cash, there are three types of accounting transactions, namely greenbacks transactions, not-cash transactions, and credit transactions.

1. Greenbacks transactions

They are the most common forms of transactions, which refer to those that are dealt with cash. For example, if a visitor purchases office supplies and pays for them with cash, a debit carte, or a check, then that is a cash transaction.

2. Not-cash transactions

They are unrelated to transactions that specify if cash’s been paid or if it will be paid in the future. For example, if Visitor A purchases a car from Visitor B and sees that it is defective, returning it will not entail whatsoever cash spent, so it falls under non-greenbacks transactions. In other words, transactions that are not greenbacks or credit are non-greenbacks transactions.

three. Credit transactions

They are deferred cash transactions because payment is promised and completed at a time to come appointment. Companies oft extend credit terms for payment, such as xxx days, 60 days, or 90 days, depending on the product or service beingness sold or industry norms.

Types of Accounting Transactions based on Objective

In that location are two types of accounting transactions based on objective, namely business organisation or not-business.

one. Business transactions

These are everyday transactions that go along the business running, such as sales and purchases, rent for office space, advertisements, and other expenses.

2. Non-business transactions

These are transactions that don’t involve a sale or purchase just may involve donations and social responsibility.

3. Personal transactions

Personal transactions are those that are performed for personal purposes such as birthday expenditures.

Double-entry Bookkeeping of Accounting Transactions

When recording accounting transactions, the double-entry method is a organisation accounting where every entry to an account requires an opposite entry to a different account producing balanced journal entries. The double-sided journal entry comprises ii equal and respective sides, known as a debit (left) and a credit (correct). It will ensure that total debits volition ever equal total credits.

Related Readings

Give thanks you lot for reading CFI’due south guide to Bookkeeping Transactions. To keep advancing your career, the additional CFI resources below will be useful:

  • Financial Bookkeeping Theory
  • Journal Entries Guide
  • Projecting Balance Sheet Line Items
  • Projecting Income Statement Line Items

What Are the Three Main Types of Bank Transactions

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