Question

Distinguish between Economic transaction and Non-economic transaction.

Answer 1

Economic transaction

1. A transaction which can be measured in terms of money is known as Economic transaction.
2. Economic transactions have effect on business from accounting view point.
3. Economic transactions are recorded in the books of accounts of business.
4. Economic transactions can be classified into three types :(1) Cash transactions, (2) Credit transactions and (3) Exchange transactions.
5. Illustration : Purchased goods worth ? 24,000 for cash.

Non-economic transaction

1. A transaction which has no monetary value or in a transaction where money is not involved are known as Non-economic transaction.
2. Non-economic transactions have no effect on business from accounting view point.
3. Non-economic transactions are not recorded in the books of accounts of business.
4. Non-economic transactions cannot be classified.
5. Illustration: Received an order for supply of goods of ? 6,000 from Kushal.