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

Question

Quizplus · Accepted Answer

An external transaction is any exchange of value between two entities that changes the accounting equation. The accounting equation (Assets = Liabilities + Equity) is a fundamental concept in accounting, but it is not an exchange of value between two entities. Recordkeeping or bookkeeping is the process of recording and organizing financial transactions. An asset is a resource that is expected to provide future economic benefits. Net income is the difference between revenues and expenses over a period of time.

An Exchange of Value Between Two Entities That Yields a Change