What is meant by Business Transaction?

The business transaction is the event that changes financial position of the business.

A business transaction has the following features:

  • It is measurable in terms of money.
  • It changes the financial position of the business.
  • It has dual aspects.
  • It must be an event – visible or invisible.
  • It should be independent and complete.
  • It may be historical or future natured.
  • It has documentary evidence.
  • It may be cash basis or accrual basis.

Examples: The followings are the examples of business transactions:

  • Invested $50000 in the business by the owner.
  • Purchased goods for $20000 cash.
  • Sold goods for $25000 cash.

Gist Words: In short, the economic events are called business transactions.