{"id":"concept:transaction","kind":"concept","label":"Transaction","synonyms":["financial transaction"],"definition":"A transaction is any real financial event — a payment, a deposit, a transfer between accounts — that eventually becomes a balanced journal entry once it's recorded.","summary":"The event itself, before it's bookkeeping. A $120.50 hardware-store charge is a transaction; it becomes a journal entry only once it's categorized to an account. In BalanceMCP, most transactions arrive as imported bank rows and sit uncategorized until that step happens.","explanation":["A transaction is the plain-language name for something that actually happened financially — money changed hands, moved between two accounts, or was refunded. It's the event, not yet the bookkeeping record of it. A bank transaction, specifically, is what that event looks like once it's been imported from a statement: a date, an amount, and a description, sitting in an inbox until it's categorized.","The distinction between a transaction and a journal entry matters more than it sounds like it should. A transaction is a raw fact — on this date, this much money moved, with this description. Categorizing it is the decision of which account absorbed the other side of that money, and that decision is what actually creates a journal entry. Until that happens, the transaction exists but has no accounting effect at all.","Not every transaction arrives through a bank import. A manual adjustment — depreciation, an owner's contribution — is also a transaction in the plain sense, just one with no bank activity behind it, recorded directly as a journal entry through a manual posting rather than through categorizing an imported row.","Every transaction, whichever path it took, ends up permanently tied to the account it was posted to, the date it happened, and a memo describing it — the raw material an audit trail is built from."],"commonMistakes":["Treating \"transaction\" and \"journal entry\" as interchangeable before categorization — a bank transaction has no accounting effect until it's categorized into an entry.","Assuming every transaction comes from a bank import — a manual adjustment with no bank activity behind it is a transaction too, recorded directly as a journal entry.","Forgetting that an uncategorized transaction, however old, still doesn't affect any report until it's actually categorized."],"category":"transactions","questions":[{"question":"What's the difference between a transaction and a journal entry?","answer":"A transaction is a raw fact — money moved, on this date, with this description. Categorizing it is what turns it into an actual journal entry in the books."},{"question":"Do all transactions come from a bank import?","answer":"No — a manual entry, like depreciation or an owner's contribution, is also a transaction, just one recorded directly as a journal entry rather than categorized from an imported bank row."}],"url":"/glossary/transaction","relatedTo":[{"id":"concept:bank-transaction","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Abank-transaction"},{"id":"concept:journal-entry","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Ajournal-entry"},{"id":"concept:categorization","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Acategorization"},{"id":"concept:memo","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Amemo"},{"id":"concept:vendor","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Avendor"},{"id":"guide:what-is-a-journal-entry","relationship":"references","weight":0.7,"api":"/api/knowledge/guide%3Awhat-is-a-journal-entry"}],"referencedBy":[{"id":"concept:bank-transaction","label":"Bank Transaction","url":"/glossary/bank-transaction"},{"id":"tool:list_transactions","label":"Find the transactions still waiting to be categorized","url":"/tools/list_transactions"}],"license":"https://creativecommons.org/licenses/by/4.0/","attribution":"BalanceMCP — https://balancemcp.com"}