A form of property is parted with in exchange for money received

A form of property is parted with in exchange for money received

Illustrative example:

On June 4, 20x2, AAA Company received cash, P250,000.00, for the sale of its old delivery truck used in the business.

Analysis and Explanation:

Note: when analyzing a business transaction, the bookkeeper or analyst must look at the side or perspective of the company.   

Analysis:

• The value received by the company: Money

• The value parted with by the company:   Form of property - Old Delivery Truck

Explanation:

The value received by AAA Company is a form of property which is a thing of value - the P250,000.00 cash money. In return, AAA Company parted with another form of property which is also a thing of value - the old delivery truck.

Therefore, in this transaction, the value received is the P250,000.00 cash money  and the value parted with is the old delivery truck.


Click here to see the recording and accounting of the above transaction