CHP 6: ANALYSIS OF BUSINESS TRANSACTION

Analysis of business transactions is a mental process which includes the following four steps: 

1. Ascertaining the accounts involved in the transaction
2. Ascertaining the nature of accounts involved in the transaction
3. Determining the effects in terms of increase and decrease
4. Applying the rules of debit and credit

Analysis of business transactions

Analyze Business Transactions Using the Accounting Equation and Show the Impact of Business Transactions on Financial Statements/

(For Services and Merchandising Company)

A merchandising company engages in the purchase and resale of tangible goods. Service companies primarily sell services rather than tangible goods. Income statements for each type of firm vary in several ways, such as the types of gains and losses experienced, cost of goods sold, and net revenue.

Income Statements for Merchandising vs. Service Companies

Recommended text/reading:

• Sangster, A., & Wood, F. (2019). Business accounting volume 2 (14th ed.). Pearson.
•  Sangster, A., & Wood, F. (2018). Business accounting volume 1 (14th ed.). Pearson.
•  Weagant, J.J., Kimmel, P.D., & Keiso, D.E. (2018). Accounting principles (12th ed.).  Wiley. (for this ebook you need to join this channel >> accounting <<