Analyses a business transaction

Analysis of business transactions

i. Each transaction has two aspects, that of giving and that of receiving. These aspects may be represented by the movements discussed above. These aspects are the ones recognized and recorded in the books of accounts.

ii. Each transaction has two parties involved and one of these two parties is always the business because it is the business dealing with other parties, in teaching, the actor in each transaction is the business.

Examples

From the following transactions, identify the two parties and two aspects involved.

Transaction

May 1 Business purchased goods the two for cash Tshs 6000/=.

Solution

The action word in the above transaction is purchase and therefore the business is one which made the purchase.

• The individual or business from whom goods are purchased are called suppliers. Two parties involved in the above transaction are Business and supplier. The above task can be summarized as follows:

May 1 Giving aspect by the business

Receiving: Receiving aspect by the business.

NB: Whenever goods are purchased by the business for cash, the business will receive the goods and pay money.

Transaction

May 2. Business sold goods for cash Tshs. 9,00

Solution

The action word in the transaction is sale and therefore it should be assumed that the business is the one which has made the action of selling.

Those people to whom goods are sold are called customers.

The two parties involved in the above transaction are Business and the customer. Th above task can be summarized as follows:

May 2 giving aspect by the business

Transaction: Receiving aspect by the business.

May 4. Business paid cash Tshs. 1000 for transport.

• The action word there is pay-meaning that the payment was made by the business. Those individuals who provide transport may be called transporters. Two parties involved in the above transactions are the Business and transporter. The above task can be summarized as follows:

May 4 Giving aspect by the business

Receiving aspect by the business

NB: Whenever the business pay for something which cannot be seen or touched, that thing is a service.

The answer from the three transactions may be presented without narrations as follows: