Features of Transaction
The following are the important features of transaction:
A transaction is an economic activity such as purchasing goods, receiving cash or cheques from customers, etc. On the other hand, inviting a friend for dinner is not an economic activity but a social activity.
A transaction causes either an inflow or outflow of goods, services, or cash. This affects and changes the financial position of the firm.
External transactions include the transfer or exchange of values between two parties, but internal transactions, like depreciation, do not. However, all transactions result in changes in the financial position or patterns of assets, liabilities, and capital.
Changes in the financial position may be either qualitative or quantitative. The purchase of goods for cash or credit is a quantitative change, whereas the depreciation of assets is a qualitative change.
The nature of the transaction should be financial. As the death of a debtor and the consequent loss due to non-recovery of debt is financial, it is a transaction, but the death of an efficient company employee is a non-monetary loss, therefore it is not a financial transaction.