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

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

Illustrative example:

On June 21, 20x2, AAA Trucking Services Company sold a used 3-in-1 printer, P1,500.00 to Emy Cruz which she promised to pay at the end of the month. 

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: oral promise to pay

• The value parted with by the company:  thing of value (used printer) 

Explanation:

The value received by AAA Company is the oral promise to pay by Emy Cruz and the value parted with is a thing of value - the used printer.

Therefore, in this transaction, the value received is the oral promise to pay from an individual and the value parted with is the thing of value - the used printer.


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