Sales transaction

Definition

A sales transaction is the process through which ownership of goods or services is transferred from a seller to a buyer in exchange for payment. This transaction typically involves documentation such as invoices and receipts to record the exchange.

5 Must Know Facts For Your Next Test

1. Sales transactions are recorded in the sales journal, which is part of the accounting system.
2. The key components of a sales transaction include the date, items sold, quantity, price per unit, and total amount.
3. Merchandising businesses conduct sales transactions involving tangible goods, unlike service businesses that sell intangible services.
4. Sales discounts, returns, and allowances can affect the final amount recorded from a sales transaction.
5. The terms of payment (e.g., cash or credit) are crucial details in a sales transaction and impact accounts receivable.

Review Questions

Related terms

Invoice: A document issued by a seller to a buyer listing products or services provided and detailing their prices.

Accounts Receivable:

Money owed to a company by its customers for products or services delivered on credit.

Sales Journal:

A specialized accounting journal used to record all credit sales.