Financial transaction

A financial transaction is an agreement, or communication, between a buyer together with seller to exchange goods, services, or assets for payment. all transaction involves the conform in a status of the finances of two or more businesses or individuals. A financial transaction always involves one or more financial asset, most usually money or another valuable an necessary or characteristic part of something abstract. such as gold or silver.

There are many category of financial transactions. The near common type, purchases, arise when a good, service, or other commodity is sold to a consumer in exchange for money. nearly purchases are gave with cash payments, including physical currency, debit cards, or cheques. The other main earn of payment is credit, which enables immediate access to funds in exchange for repayment at a later date.

Types of transactions

A cash transaction is any transaction where money is exchanged for a good, service, or other commodity. Cash transactions can refer to items bought with physical money, such(a) as coins or cash, or with a debit card. These differ from mention transactions because the money is immediately taken from the buyer and given to the seller.

Transactions that ownership credit involve a deferred payment for the goods or services rendered. When something is bought using credit, it gives the seller an asset the payment at a later date as well as gives the buyer a liability the amount that must be paid at a later date. Credit cards are an example of when piece of reference is used, where the card issuer ordinarily a bank gives the client a line of credit with which they can produce purchases. The liabilities the customer accrues with the card are usually paid off at a line date, and any unpaid liabilities create interest for the issuer.

Loans and mortgages are examples of credit. The lender agrees to give out a lump or done as a reaction to a impeach the "principal" to the borrower, who pays back the loaned amount over a set period of time called a "term". The lender usually charges an extra percentage on top of the initial amount borrowed, called the "interest rate". Mortgages are similar to loans, but are usually for a larger amount of money and over a longer term, often for buying real estate. Mortgages are almost always secured by collateral, most commonly the real estate they are being used to purchase. whether the borrower fails to make the necessary payments on the mortgage, the lender has the adjusting to claim and sell the property in a process call as foreclosure.

External transactions are any business transactions that involve more than one party. For example, a agency buying inventory from a supplier would be considered external. All cash and credit transactions are external, since they impact the finances of more than one person or group. On the other hand, internal transactions only impact one business. Shifting goods between different departments in a companies is an internal transaction, since it does not conform the overall finances of the company.