Is the transaction an external transaction?
Loan given to an employee is not considered an external transaction.

Explanation:
- Internal transaction: An internal transaction refers to the movement of resources or obligations between entities within the same organization. In this case, the loan given to an employee is an internal transaction as it involves two parties within the same organization.
- External transaction: An external transaction, on the other hand, involves entities outside the organization. It typically includes transactions with customers, suppliers, lenders, or other third parties that are not part of the organization.
- Importance: Distinguishing between internal and external transactions is crucial for financial reporting and analysis. Internal transactions do not impact the organization's financial position but are relevant for internal record-keeping purposes. External transactions, on the other hand, have a direct impact on the organization's financial statements and must be accurately recorded and disclosed.
- Conclusion: In the case of a loan given to an employee, it is considered an internal transaction as it involves two parties within the same organization. Therefore, it does not fall under the category of external transactions.