नॉन मोनेटरी ट्रांजैक्शन आर नॉट रिकॉर्डेड इन द बुक ऑफ अकाउंट explain
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Answer:
A nonmonetary transaction occurs when a business or commerce activity concludes without the transfer of money between accounts for parties tied to the transaction. Nonmonetary transactions can be something as simple as a change of address or can refer to more complex transactions in the financial sector.
For example, a $0 deposit to initiate an automated clearing house transaction (e.g., direct deposit or auto-withdrawal) would be considered a nonmonetary transaction. The even, or in-kind, exchange of assets (e.g., transferring property or inventory) is another nonmonetary transaction. In cases of property exchange, the fair values of the underlying assets need to be determined, if possible
Understanding Nonmonetary Transactions
Nonmonetary transactions can be either reciprocal or nonreciprocal. Reciprocal (two-way) nonmonetary transactions involve two or more parties exchanging nonmonetary goods, services, or assets. Nonreciprocal (one-way) nonmonetary transactions involve the transfer of goods, services, or assets from one party to another, such as a business making an in-kind donation of employee volunteer time or physical items to another organization.
Payment-in-kind (PIK) is the use of a good or service as payment instead of cash. Payment-in-kind also refers to a financial instrument that pays interest or dividends to investors of bonds, notes, or preferred stock with additional securities or equity instead of cash. Payment-in-kind securities are attractive to companies preferring not to make cash outlays and they are often used in leveraged buyouts.
In either case, in-kind transactions are nonmonetary. For example, a farmhand who is given a "free" room and board instead of receiving an hourly wage in exchange for helping out on the farm is an example of payment-in-kind.
The Internal Revenue Service (IRS) refers to payment-in-kind as bartering income.
The IRS requires people who receive payment-in-kind income through bartering to report it on their income tax return. For example, if a plumber accepts a side of beef in exchange for services, he should report the fair market value of the beef or his usual fee as income on his income tax return.
A classic business expression applies here: there is no free lunch. Rarely is business as altruistic to expect one party to offer value to another, without expecting something in return. This expectation is not always money. For instance, in politics—which often is closely tied to business—politicians often accept or are parties to nonmonetary transactions. It is often far too tempting for a donor not to expect some favor in return.
Nonmonetary transactions beyond standard administrative transactions can quickly descend into a quid pro quo situation. The Latin expression is best summed up as "something for something." One party grows to expect something in return for a favor, which doesn't necessarily have to be monetary in nature.
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Related Terms
Sale Definition
A sale is a transaction between two parties where the buyer receives tangible or intangible goods, services, and/or assets in exchange for money. more
What Is Trade?
A basic economic concept that involves multiple parties participating in the voluntary negotiation. more
Barter (or Bartering) Definition
Barter, or bartering, is the act of trading a good or service for another good or service without the use of money. more
Money Definition
Money is a medium of exchange that market participants use to engage in transactions for goods and services. more
Peer-to-Peer (P2P) Economy Definition
A peer-to-peer economy is a decentralized model whereby two parties interact to buy or sell directly with each other, without an intermediary third-party. more
Reading Into Quid Pro Quo
The expression "quid pro quo," Latin for "something for something," is used to describe when two parties engage in a mutual agreement to exchange goods or services. more
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