A business transaction is an exchange between two or more parties that involves the transfer of goods, services, or funds. These transactions can occur in various forms, such as sales, purchases, or contracts, and are essential for the operation of any business. Each transaction is typically recorded in financial statements to track the company's performance and maintain accurate accounting records. Transactions can be classified into two main types: cash transactions and credit transactions. In a cash transaction, payment is made immediately, while in a credit transaction, payment is deferred to a later date. Understanding these types helps businesses manage their cash flow and financial planning effectively.