Use of property, or hire of services, of another person is received in exchange for money parted with.

Use of property, or hire of services, of another person is received in exchange for money parted with

Illustrative example for use of property of another person or entity:

On June 30, 20x2, AAA Trucking Services Company paid cash, P10,000.00, to B & M Property Group Company, in payment for the month on the rental of shop space occupied by AAA Co. 

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: use of the property (of another person)

• The value parted with by the company: the money  

Explanation:

The value received by AAA Company is the use of shop space owned by another person. In exchange, AAA Company parted with is the money.

Therefore, in this transaction, the value received is the use of property of another person  and the value parted with is the money.


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

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Illustrative example for hire of services of another person or entity:

On June 24, 20x2, AAA Trucking Services Company paid cash P7,000.00, to Rep-Car Auto Repair Shop for the minor repair of its delivery truck. 

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: hire of services of another entity

• The value parted with by the company: money 

Explanation:

The value received by AAA Company is the hire of services of the auto-mechanic. In exchange, AAA Company parted with is the money.

Therefore, in this transaction, the value received is the hire of services of another person or entity and the value parted with is the money.


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