A transaction is a financial activity where there is an exchange of value, typically involving money. For instance, when a customer purchases a product from a store, the money they provide in exchange for the product constitutes a transaction. Transactions are the basic unit of operation in accounting and finance, forming the primary events recorded in the accounting records.
For example, if a business purchases office supplies and pays for them by issuing a cheque, this constitutes a transaction as it involves both the expenditure of funds and the receipt of goods. Similarly, a service provider receiving a subscription fee for their service represents a transaction between the service provider and the customer.