2. Types of Business Transactions:
Business transactions, which are required to be entered in the books of accounts, can be classified into four types. They are:
(a) Cash transactions.
(b) Credit transactions.
(c) Barter transactions.
(d) Non-cash transactions or paper transactions.
(a) Cash Transactions:
A Cash transactions refers to any business transaction which involves immediate (i.e., ready) payment or receipt of cash, purchase of goods for cash, sale of goods for cash, purchase of an asset for cash, sale of an asset for cash, borrowing of money, lending of money, payment of an expense, receipt of any income, etc., are examples of cash transactions.
(b). Credit Transactions:
A credit transaction is business transaction where the payment or the receipt of money is postponed to a future date. Purchase of goods on credit, sale of goods on credit, purchase of an asset on credit, sale of an asset on credit, interest on loan due to the lender, any unpaid expense etc., are examples of credit transactions.
(c). Barter Transaction:
A Barter transaction is a business transaction where, no doubt, receiving of something and giving of something take place simultaneously, but there is no exchange of cash. Sale of furniture in exchange if purchase of type-writer, giving of goods for furniture purchased, giving of goods to an employee in settlement of his salaries, giving of furniture to the manager in settlement of his salary, etc., are examples of barter transactions.
(d). Non-cash Transaction or Paper Transaction:
A non-cash transaction or paper transaction is a business transaction, where there is no payment or receipt of cash either immediately or at a future date. Examples of non-cash or paper transactions are depreciation charged on any fixed asset, bad debts written off, loss of goods by fire, etc.
Business transactions, which are required to be entered in the books of accounts, can be classified into four types. They are:
(a) Cash transactions.
(b) Credit transactions.
(c) Barter transactions.
(d) Non-cash transactions or paper transactions.
(a) Cash Transactions:
A Cash transactions refers to any business transaction which involves immediate (i.e., ready) payment or receipt of cash, purchase of goods for cash, sale of goods for cash, purchase of an asset for cash, sale of an asset for cash, borrowing of money, lending of money, payment of an expense, receipt of any income, etc., are examples of cash transactions.
(b). Credit Transactions:
A credit transaction is business transaction where the payment or the receipt of money is postponed to a future date. Purchase of goods on credit, sale of goods on credit, purchase of an asset on credit, sale of an asset on credit, interest on loan due to the lender, any unpaid expense etc., are examples of credit transactions.
(c). Barter Transaction:
A Barter transaction is a business transaction where, no doubt, receiving of something and giving of something take place simultaneously, but there is no exchange of cash. Sale of furniture in exchange if purchase of type-writer, giving of goods for furniture purchased, giving of goods to an employee in settlement of his salaries, giving of furniture to the manager in settlement of his salary, etc., are examples of barter transactions.
(d). Non-cash Transaction or Paper Transaction:
A non-cash transaction or paper transaction is a business transaction, where there is no payment or receipt of cash either immediately or at a future date. Examples of non-cash or paper transactions are depreciation charged on any fixed asset, bad debts written off, loss of goods by fire, etc.
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