3.1 Types of Transactions

1. External transactions. An entity may engage in transactions with outside parties that affect its financial statements. 

 There is an exchange of economic resources and/or obligations between the entity and one or more outside parties.

Eg. the purchase of office supplies

2. Internal transactions. Other economic events that do not involve external transactions are recorded because they affect the internal relationships between the entity’s assets, liabilities and equity. The term transaction is often used to refer to all events that are recorded in the accounting system.

Eg. Use of office supplies by the entity's employees and of equipment to perform a service

3. Non-transaction events. Some events of importance to the entity are not usually recorded because there has not been an exchange of goods or services.