Unit 1 Transcript.pdf - Business Transactions and...

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Business Transactions and Accounting Equation00:00:02In this lecture, we will learn about how businesses conduct transactions, how these transactions affect the financialposition of the business, and the concept of accounting equation.00:00:17Let's begin by understanding what a transaction means.00:00:21In a business, a transaction takes place when exchanging goods or services for money.00:00:27In accounting, a transaction is defined as a completed sale or exchange of goods or services.00:00:34In an exchange, the are at least two equal actions, something is given and something is received.00:00:41For example, buying a computer, borrowing money for the business, making a sale and receiving money, paying salaries,etc, are all business transactions that involve money and will need to be recorded.00:00:56Let's take the case of Web Design Inc.00:00:58and look at a few transactions After starting the business, David purchases a new laptop for $800 on June 5.00:01:09This is a transaction as it involves exchange of goods for money.00:01:14There are two equal actions, laptop is received and money is given.00:01:22David takes up a new order to build a website for a restaurant near your office.00:01:27David will provide the service of designing and developing the website for the restaurant.00:01:32In exchange for this service of developing the website, David will be paid money.00:01:38He received an advanced payment of $1000 now and will be paid the rest after the project is completed.00:01:47This is a transaction, as it involves exchange of service for money.00:01:52There are two equal actions, website is received and money is given.00:02:00Here, it is important to note that initially, David may not have to record any transaction unless he receives an advance.00:02:09A transaction will be recorded only if there is any money received or any money due.
00:02:15At this stage, David has got the order and received an advance of $1000.00:02:22Every transaction has an impact on the businesses' resources.00:02:26The resources of a business referred to its supply of goods, services, information, or expertise that allows the business tooperate and grow.

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Term
Summer
Professor
N/A
Tags
Balance Sheet, Generally Accepted Accounting Principles

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