Business transaction types, accounting, accounts

As objects of accounting are the business transactions. They are the elements of the processes occurring at the enterprise, or the facts of economic life of the company. Economic, accounting transactions affect the financial position of the company.

Definition

Business transaction is a separate action, which changes the volume, composition, use and allocation of funds and their sources. In economic terms, any fact has 2 addresses. Changes in one object provoke an adjustment in the other by the same amount. Business transaction – the event or action leading to the finding tools and sources available to the company.

Specifications

Business transactions on the balance sheet affect the assets, i.e. the assets of the company. They may be the sources of its formation (liabilities). There are events that affect both parts of the statements. The facts of economic life constantly affect the balance sheet. This, in turn, leads to an adjustment of the value of the articles and the asset and liability.

Classification

There are the following types of transactions:

• +A-A. This category of events changes the composition property, that is, relates only to the asset. In this case, the balance sheet is not adjusted.
• +P-P. These operations affect the sources of material assets of the company. They affect only the liability. In this case, the balance sheet total remains unchanged.

• +A+P. This event category affects the size of the property and on the sources of its formation. The adjustment is thus carried out in the direction of increasing. The balance sheet on the liability and the asset increases by the same amount.
• -A-P. These operations also affect the property and sources of its occurrence. But the changes go downward.

Accounting>Business transactions

Each fact of economic life must be defined in time, appreciated. In line with this are filled with accounts of economic transactions. Definition of fact in time is caused by the need to establish the date of registration. Dates reflect:

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• The Transfer of ownership of products, works, services rendered.
• Loans and credit.
• The Order of recognition of expenses and income from ordinary and other activities that reflect their respective periods in the documents.
• Execution of payments in foreign currency, etc.

Evaluation

Every business transaction should have its cost at the time of Commission. The company necessarily carries out the appraisal of the property to reflect it in the documents in terms of money. In accordance with the applicable accounting principles, all liabilities, assets, equity capital, expenditure, receipts must reflect the appropriate value.

Tangible assets acquired for a payment, is estimated by summing the actual costs of the purchase. Donated property is taken at the market price ruling at the date of the posting. The material values created by the enterprise are measured at cost of manufacture.

Reflection

Business transaction is issued on paper or via electronic media. Through these documents are the primary record of events. Clearance is performed in the order in which the operation was performed. This order allows you to:

• Maintain continuous, complete enumeration of objects.
• Validate the entry made in accordance with the documents having probative force.
• Use reporting to operational management and ongoing monitoring of the activities of the company.

In addition, ensures the observance of financial discipline in the enterprise because the primary documentation acts as the main source of information for further oversight over the appropriateness, correctness, and legality of each operation.

Double entry

The development of information communication synthetic accounts arising in the process of registration of facts of economic activities of the company, in the nomenclature of the plan is called correspondence. It should say that it reflects the legal relationships between the parties. Correspondence can be systematic or chronological. The facts of economic activities reflected in the accounts according to the principle (rule) of double entry. Its essence lies in the fact that any event is logged two times. Information reflected on the debit and credit accounts. This entry has a reference value.

A Set of debit turnovers on synthetic accounts for the month should equal the amount of the credit. If the values do not match, then a mistake was made in reflection of events. In accordance with the principle of double-entry of information communication arising between the accounting objects may appear in different ways. For example, the formula image reflects the name of offsetting account. This indicates the numerical value of a record. The reflection of the offsetting accounts in the primary documentation is referred to as account assignment.

Key tasks of the expert

Within the framework of their practical activities, the accountant must decide three questions. They are defining:

• The Time in which was performed the business transaction.
• The Value of the event expression.
• Classification of operations according to the nomenclature of accounts.

From this follow three key tasks, solution of which will allow to form correctly the documentation:

• Identification of the fact of economic activities in time.
• Evaluation of the event.
• Classification of the operation item.

Conclusion

Accounting like any other discipline, has its own subject, objects, specific methods and techniques of acquisition, generalization, data storage and transfer them to users. From proper use of existing tools will depend on the completeness and accuracy of reporting. This, in turn, will enable stakeholders to receive timely representation of financial situation of a firm.

Reporting required both external and internal users. The former include investors, creditors, and counterparties. Internal users are parties, employees of the Executive office. Reporting allows you to identify the areas of expenditure, the reasonableness of the costs of unprofitable areas of activity of the enterprise. The results of the analysis of information taking important management decisions.