An exchange of value between two entities that yields a change in the accounting equation is called:
A) An external transaction.
B) The accounting equation.
C) Net Income.
D) Recordkeeping or bookkeeping.
E) An asset.

Question

Quizplus · Accepted Answer

An external transaction is an exchange of value between two entities, such as buying inventory from a supplier or selling products to a customer, that results in a change in the accounting equation. The accounting equation is Assets = Liabilities + Equity, and any transaction that affects one or more of these elements will cause a change in the equation. Net income is a measure of profitability, and recordkeeping/bookkeeping is the process of recording, classifying, and summarizing financial transactions. An asset is a resource that is owned or controlled by an entity and has future economic benefits.

An Exchange of Value Between Two Entities That Yields a Change