Financial Transaction

In conducting, numerous types of transactions take place on a daily basis. But, transactions which can only be described in monetary value are recorded in accounting system by passing a entry in the book which is called Journal. Any sort of event which cannot express in monetary state, are not called financial event and as such have no place in the accounting system.

A single entry in the journal is called the journal entry. In order to pass a journal entry, we have to debit and credit an accounting heads so that the accounting equation remains in the balance. Every financial transaction affects items of income, expenses, equity, assets and liabilities. While recording financial transaction, we have to include date of the transaction, name of the heads getting affected, debit and credit side like below:

Date      Accounts                             Debit         Credit

1 July     Cash                                      1,000    


                                Bank                                      1,000     

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