An oral promise (by an individual or entity) to pay is parted with in consideration for a thing of value received

An oral promise (by an individual or entity) to pay is parted with in consideration for a thing of value received

Illustrative example:

On June 23, 20x2, AAA Company bought a brand new L200 Epson printer, P9,800.00  which the company promised to pay in 10 days. 

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:  brand new delivery truck 

• The value parted with by the company:  oral promise to pay 

Explanation:

The value received by AAA Company is a thing of value - the brand new L200 Epson printer.  In exchange, AAA Co parted with its oral to promise to pay.

Therefore, in this transaction, the value received is the brand new  L200 Epson printer  and the value parted with is the oral to promise to pay by AAA Co.


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