Final answer:
A business event with monetary impact that is recorded as an entry in accounting records is known as a transaction. Examples include sales, purchases, and paying off debt. These are recorded using double-entry bookkeeping and affect the financial statements of the business.
Step-by-step explanation:
A business event that has a monetary impact on an entity's financial statements, and is recorded as an entry in its accounting records, is typically known as a transaction. This could be anything that changes the financial position or the results of operations of the business, such as sales, purchases, loans, payments, and investments. Each transaction is recorded using the rules of double-entry bookkeeping, meaning that for each transaction, debits and credits equal to the amount of the transaction are recorded.
Examples of Business Transactions
- Selling goods or services to customers, which would generate revenue.
- Purchasing inventory or supplies, which would be recorded as an expense or an asset.
- Paying off debt, which would reduce liabilities on the balance sheet.
Understanding how to record and analyze these transactions is crucial for keeping accurate financial records and providing insights into the financial health of a business.