Business Transactions Overview
This guide outlines 30 simple business transactions using a limited number of accounts, ensuring clarity and ease of understanding.
Accounts Used
- Cash
- Sales Revenue
- Purchases
- Accounts Receivable
- Accounts Payable
- Inventory
- Rent Expense
- Utilities Expense
- Capital
- Drawings
- Salaries Expense
- Office Supplies
- Advertising Expense
- Equipment
- Service Revenue
Transactions
1. Cash sale of goods: Cash increases, Sales Revenue increases.
2. Cash purchase of inventory: Cash decreases, Inventory increases.
3. Credit sale to customer: Accounts Receivable increases, Sales Revenue increases.
4. Cash payment to supplier: Cash decreases, Accounts Payable decreases.
5. Cash received from customer: Cash increases, Accounts Receivable decreases.
6. Cash payment for rent: Cash decreases, Rent Expense increases.
7. Cash payment for utilities: Cash decreases, Utilities Expense increases.
8. Owner invests cash: Cash increases, Capital increases.
9. Owner withdraws cash: Cash decreases, Drawings increases.
10. Cash payment for salaries: Cash decreases, Salaries Expense increases.
11. Purchase of office supplies: Cash decreases, Office Supplies increases.
12. Cash for advertising: Cash decreases, Advertising Expense increases.
13. Purchase of equipment: Cash decreases, Equipment increases.
14. Credit purchase of inventory: Inventory increases, Accounts Payable increases.
15. Cash sale of services: Cash increases, Service Revenue increases.
16. Cash refund to customer: Cash decreases, Sales Revenue decreases.
17. Payment of outstanding bills: Cash decreases, Accounts Payable decreases.
18. Depreciation on equipment: Equipment decreases, Depreciation Expense increases.
19. Cash payment for maintenance: Cash decreases, Expenses increase.
20. Credit sales returns: Inventory increases, Accounts Receivable decreases.
21. Cash sale discounts: Cash decreases, Sales Revenue decreases.
22. Cash purchase of assets: Cash decreases, Assets increase.
23. Payment for subscriptions: Cash decreases, Expense increases.
24. Cash received for future services: Cash increases, Deferred Revenue increases.
25. Cash investment in stocks: Cash decreases, Investments increase.
26. Loan received from bank: Cash increases, Liabilities increase.
27. Equipment sold for cash: Cash increases, Equipment decreases.
28. Payment of interest on loan: Cash decreases, Interest Expense increases.
29. Cash for business insurance: Cash decreases, Insurance Expense increases.
30. Cash collection of account receivable: Cash increases, Accounts Receivable decreases.
Conclusion
These transactions are designed to illustrate basic accounting principles using a limited set of accounts, making it easier to understand the flow of business activities.