Transactions tree not list? I try to understand how Bitcoin handles change or the combination of multiple transactions to provide sufficient funds for a given price.

Bitcoin transactions contain an array for the input transactions and an array for the UTXO outputs (vout).

For example: If I'm Frank and I send Charlie 1 BTC with an input transaction which holds 1.2 BTC, does that mean, that my next TX using the 0.2 BTC and Charlies TX using the 1 BTC form two new TX chains?



Or would I just reference the latest TX in the chain of transactions, containing both parts of the 1.2 BTC and sometimes the 0.2 BTC is referenced as VIN element and sometimes the 1.0 BTC?
In your example, there will be two chains of transactions as different transactions are spending the outputs of one transaction. Because there are two distinct transactions spending from those two outputs, there are now two transaction chains coming from one transaction. However this does not mean that the transaction chains won't converge or meet. Calling it a transaction chain or a tree isn't really accurate. It's actually a directed acyclic graph.