handout 3

• ⦁ Internal transactions - Any financial transaction that occurs within an organization rather than with a third party is considered an internal transaction. Most of the time, it's an exchange of money between departments or employees and the company. While internal transactions impact the company's finances, they are not sales like external transactions. Examples of internal transactions include a department giving office supplies to another department or an employee receiving their salary.
• ⦁ External transactions - A trade of goods and services for money is an external transaction, also known as a business transaction. While the other party is selling a product or service, one party is purchasing it. A person and an organization, two individuals, or both can engage in this transaction. External transactions include, for instance, a customer buying a hammer from a hardware store or a business purchasing equipment from a supplier
• Check


  A written, dated, and signed request for payment from a specific individual or organization to a bank. The individual or organization is referred to as a payor, while the payee is the person whose name appears on the check.
• Invoice


  A detailed business document that details the goods or services provided to the customer, the total amount due, and the preferred payment method. The customer can receive electronic or paper invoices from the seller.
• Receipt


  When a company receives payment for goods or services provided, it issues a payment receipt, also known as a receipt of payment, to its customer. Even if a deposit or partial payment is made on a sale, receipts for all payments should be issued.
• Credit memo


  A commercial document a seller gives to a buyer. The sales return journal is derived from credit notes. To put it another way, the credit note is evidence that sales have decreased.
• Employee time card


  A piece of paper that keeps track of when a worker begins and ends their shift to show how many hours they worked.
• Deposit slip


  A form a bank gives a depositor to fill out. Its purpose is to categorize the items in the deposit transaction. If the item is a check, the category includes where it came from, such as a state or a local bank if the bank is not local.
• Purchase order


  A commercial document and the seller's first official offer, a purchase order specifies the types, quantities, and agreed-upon prices of goods or services. It regulates the acquisition of goods and services from third parties.