Transaction - Meaning & Definition

Published in Marketing and Strategy Terms by MBA Skool Team

What is Transaction?

Transaction is an activity in which goods, services or money is passed from one account or person to another; n act of doing business; an agreement, exchange, contract that takes place between two parties and establishes a legal obligation.

Transaction has different meaning in different domains. Transaction in –

• Accounting – an activity that leads to change in assets, liabilities and net worth of an organization. These are recorded in journal and ledger of the organization. These transactions are recorded differently depending on the accounting system followed by the organization. In accrual accounting, transaction is recorded when revenue or expenses are realized or incurred whereas in cash accounting transaction is recorded only when organization actually spends or receives money

• Banking – An activity of depositing or withdrawing money from the bank account

• Commerce – Exchange of goods and services between a buyer and a seller. In this section every transaction has three components:

- Transfer of money

- Transfer of tittle with/without transfer of possession

- Transfer of exchange rights


For example

- Purchases – A product is purchased in exchange of money, which leads to decrease in finances of the buyer. Example – Buying mobile phone

- Loan – Lender gives a single large amount of money and the borrower repays it in smaller portions with interest

- Mortgage – Here borrower agrees to give a high value item to lender in exchange of money

- Credit card, Debit Card, Electronic fund transfer

• Computing – It could be Database transaction which is work performed within a database or Atomic transaction which is series of database operations


Hence, this concludes the definition of Transaction along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

Browse the definition and meaning of more similar terms. The Management Dictionary covers over 1800 business concepts from 5 categories.

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