What Are The Four Questions / Steps Used To Analyze A Transaction
How To Analyze A Business Transaction? There are four types of steps questions used to analyze a Transaction takes place between two or more parties in the life of a business. To know the answers of these questions help us in understanding the changes occurred in different account balances. Let’s consider a transaction as an example and then describe the four steps to be followed while Analyzing A Transaction . Example: Sold Services For Cash for Rs. 5000. 1. Which types of accounts are involved in a business transaction This transaction involves Cash account and Sales account. 2. Classification of each type of account involved Sale is a revenue account while Cash is a current asset account. Sales revenue affects owner’s equity account while cash affects assets accounts. 3. Increase / Decrease in Accounts Sales is increasing as it is the result of profitable activities or operational activities of the owner of the business i.e., services are rendered to customers c...