what is a transaction 
a transaction is a completed agreement between a buyer and a seller to exchange goods services or financial assets in return for money the term is also commonly used in corporate accounting in business bookkeeping this plain definition can get tricky a transaction may be recorded by a company earlier or later depending on whether it uses accrual accounting or cash accounting understanding transactionsa sales transaction between a buyer and a seller is relatively straightforward person a pays person b in exchange for a product or service when they agree on the terms money is exchanged for the good or service and the transaction is complete transactions can be more complex in the accounting world because businesses may make a deal today which won t be settled until a future date or they may have revenues or expenses that are known but not yet due third party transactions can also complicate the process whether a business records income and expense transactions using the accrual method of accounting or the cash method of accounting affects the company s financial and tax reporting whereas accrual accounting is used most often by businesses with an average of over 26 million over the prior three years cash accounting is used primarily by small businesses 1transactions using accrual accounting