Which of the following is a business transaction?

• A. plan advertising for upcoming sale
• B. purchase inventory on account
• C. give employees a raise beginning next month
• D. submit estimate for construction project

Answer: (B)

A business transaction is an economic event that changes the company’s financial position and involves an actual exchange with another party, recorded in the accounting records. Purchasing inventory on account fits this because it increases inventory (an asset) and increases accounts payable (a liability) at the time of purchase, so two accounts and a monetary value are involved. The other options are planning or proposals and do not reflect a completed exchange or a recorded financial obligation yet: planning advertising for an upcoming sale is just a plan, giving employees a raise next month creates a future obligation but isn’t an actual recorded transaction until the payroll is processed, and submitting a construction estimate is a bid, not a financial event.