Question

list 10 examples of internal business transactions and external business transactions. whats the difference?

Answer 1

Examples of Internal Business Transactions

1. Depreciation.
2. Amortization of prepaid expenses.
3. Inter-departmental stock transfer.
4. Internal transfer of consumables
5. Cost of training employees
6. Stock revaluation
7. Use of basic supplies
8. Packaging expenses
9. Sorting from WIP to finished goods
10. Internal machinery maintenance

Examples of External Business Transaction

1. Payment to vendors
2. Transportation expenses
3. Purchase of machinery
4. Sale of goods
5. Interest payments
6. Dividend payout
7. Government taxes and duties
8. Salary payment
9. Bank transactions
10. Share subscription

The key difference between internal and external business transaction are as follows

Internal Business Transaction

1. Its a business transaction which occurs without involving an external third party
2. There is no exchange of resource outside of the organisation. any exchange will be within the organisation
3. There is generally no or minimal impact on cash flow.
4. Organisation and its internal employees are the only parties involved.
5. It is triggered by internal functions or passage of time

External Business Transaction

1. Its a business transaction which involves external third party
2. There is exchange of resource outside of the organisation.
3. In most cases there is an impact on cash flow.
4. Multiple parties are involved in the transaction including external third parties.
5. it is triggered by business dealings involving external exchange of resources.