Business Transaction

Business transaction is an event which affects a business financially or in other words it causes a change in its assets, liabilities and/or equity. Any event which does not affect the business financially is not recorded in accounting system.

Business transactions are recorded in a special type of register called journal.

Journal Entry Format

Each individual record in a journal is called journal entry. Journal entries are passed according to the principle of the accounting equation and it obeys the debit credit rule. Entries made

A typical journal entry displays the following information:

  • Date of transaction
  • Names of accounts involved in the transaction
  • Debit and credit columns for entering dollar amounts

The format of a typical journal entry is shown below:

Jan 1Cash4,400

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