What is the meaning of transaction analysis in accounting?
Answers
Answer:
Explanation:
Accounting transaction analysis is the process involved of the first step in the accounting cycle which is to identify and analyze bookkeeping transactions.
The analysis involves using information from the accounting source documents to identify firstly whether the transaction is an accounting transaction, and then applying the basic bookkeeping rules of debit and credit to break down the transaction into its debit and credit components parts.
Transactions can be external transactions or internal transactions. External transactions involve the business and a third party such as a supplier, they are easier to analyse as there will always be source documents evidencing the transaction. Internal transactions, such a depreciation adjustments, involve only the business itself and may not have accounting source documents.