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Transactions: Definition, Types, Forms, and Benefits

You must have often heard and even made transactions. In short, the transaction is activities that have a financial impact on the business people, whether it is reduced or increased. A transaction must be reasonably measurable for it to occur. If business people cannot measure a business, you can not say it as a transaction because it cannot be count on its pure estimate. Therefore, several types of measurement are needed so that an activity can be viewed as a transaction. A long time ago, transactions were carried out by exchanging goods because there was no money. When money appeared, money began to be known as a medium of exchange.

Definition of Transaction

Transactions are activities that can make changes to an asset or financial and have reached an agreement between the buyer and seller. Examples activities such as buying, selling, paying, and others. In the world of accounting, the transaction means an activity that directly impacts financial status and financial statements.

At an agency, company, or business, every transaction will get the record in the transaction administration. Transaction administration is a record that records an activity that directly impacts the financial aspect in a precise way. To make it more transparent, here is an explanation from experts:

Definition of transactions according to experts

  • Indra Bastian

According to Indra Bastian, a transaction is a meeting between a buyer and a seller that is mutually beneficial and includes recorded evidence, data, or supporting documents.

  • Slamet Wiyono

According to Slamet Wiyono, a transaction is an event that involves at least two parties and exchanges, have a relationship in a business association, borrowing, or other activities without any coercion or applicable legal provisions.

  • Mursyidi

Mursyidi argues that transactions are events in the business world that cover many things, from buying and selling processes, receipts, and payments to losses, fires, flows, and events valued in money.

Transaction System

A transaction system is a collection of routine transaction records that you can use in various business processes. Also, there are two systems in the community, cash and cashless. In today’s digital era, the cashless system is growing due to a large amount of digitization in the economic sector. Due to the development of the non-cash system, the cash or paper money system had many changes and provisions recently.

The government in recent years also supports a cashless system that the government says can counter illegal activities on the black market. The use of debit cards and credit cards is also increasing along with the development of the non-cash system. Not only that, electronic payment systems such as Apple Pay, Google Pay, PayPal, and others also make it easier for people to transact using only smartphones.

Transaction Type

Internal transactions

It is a type of transaction that involves fields within a company that changes its financial state. This type does not include external parties of the company. In this type, there is also an internal audit to evaluate the company. Internal audit is a systematic and objective assessment of internal auditors that aims to examine and evaluate the activities of an organization or company.

External transactions

This type is a type of transaction that involves parties outside the company and changes the company’s economic conditions. Furthermore, most businesses or companies carry out this activity.

Form of Proof of Transaction

Every transaction activity must have reliable evidence. Also, you can use this evidence if an unwanted dispute occurs later. The following are forms of proof of transactions:

Proof of internal transactions

This proof is usually in the form of internal memos that got from superiors to colleagues or subordinates. Also, this proof is evidence of transactions that occur within the company environment.

Proof of external transactions

Proof of external transactions is evidence of recording every transaction that occurs with parties outside the company. Some examples are as follows:

  • Receipt
Source: Pinterest.com, printablecashreceipts.com

Proof of receipt of money contains the recipient’s signature and needs to give to the paying party and serves as proof of a valid transaction.

  • Debit note
Source: Pinterest.com, BoostExcel.com

A debit note is proof of transaction for the return of goods that have been sold and given to the buyer.

  • Check

A check is a letter or document containing the total order from a customer for the bank to pay the amount of money in the letter.

  • Invoice

An invoice is a sale or invoice with an appraisal of payment which is usually on credit.

Conclusion

That was a complete explanation of the transaction starting from the definition, system, types, and forms of evidence. In the business world, business people must record all forms and types of transactions accurately and neatly. The benefits you get when you have financial records are you can use it as a business plan, knowing the number of sales and purchases, management information, and a decision-making tool.

HashMicro provides an Accounting System that can manage all transactions, cash flow, financial report generation, and more through the best accounting software. Contact us right now for a free demo to manage all your transaction activities more efficiently.

Interest in getting savvy tips for improving your business efficiency?

Muhammad Syahrian
Content Writer Intern at HashMicro. Passionate and hardworking person to develop my marketing skill.

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