What are business incidents

Business transactions

Business transactions - not as dramatic as it sounds

The term "Business transaction“Is maybe a little misleading. An "incident" in the "business" - that sounds like excitement at first, like a disruption in the operational process. Come with it Business transactions in almost every company every day.

What exactly is a business transaction?

By definition, a business transaction is a process that affects a company's assets. The company's assets can rise or fall; there are also business transactions that do not change the amount of the assets. That sounds strange at first, because if the amount remains the same, then you can't really speak of an “influence on company assets”, can you? A few illustrative examples will help to clarify this question.

Business transactions that change company assets

A typical example of a business transaction that lowers a company's assets is the payment of an invoice issued by a service provider, for example. If, on the other hand, the company issues an invoice itself, which is then paid by a customer of the company, it is analogously a business transaction that increases assets. These business transactions with an impact on income are also called asset / liability reduction or asset / liability increase.

Active exchange and passive exchange - these are also business transactions

In addition, there is also the "active swap" and the "passive swap". These are business transactions with no impact on profit or loss, in which the total assets remain untouched, but the values ​​of the individual asset or liability items change. Here is an example: A company takes money from the asset position “current assets” in order to invest it in machines (which belong to the position “fixed assets”). This increases the value of the fixed assets by the same amount by which the current assets decrease; the total assets remain the same; it is a business transaction in the "asset swap" category. It works the same way on the liabilities side of the balance sheet, in which case it is a liability swap.
 

What you need to consider as an entrepreneur

If your company is required to be accounted for, every business transaction, regardless of whether it affects profit or loss, must be recorded as a posting record in the books. In the case of the income surplus calculation, on the other hand - with a few exceptions - only the business transactions affecting income have to be recorded.