Week 3 - Business transactions

Question 1

What are business transactions?

Answer 1

Occurences that affect assets, liabilities and equity items

Question 2

When are business transactions recorded?

Answer 2

When they can be reliably measured in monetary terms (monetary concept)
Occur at arm’s length (legitimate transaction)

Question 3

What is the entity concept?

Answer 3

Every entity must keep records of its business transactions separate from any personal transactions of the owners

Question 4

How do the two separate entities (business and owner) interact?

Answer 4

Where the owner either: Withdraws items (cash, other assets) from the business for personal use, OR

Contributes additional funds (cash or assets from their personal funds) into the business

These are BUSINESS transactions