Routine Transactions: Examples

Routine transactions

In accounting, a routine transaction represents is a transaction (see: transaction classes) reflecting recurring financial activities recorded in the books of account of an entity as conducted in the normal course of business. As opposed to nonroutine transactions, routine transactions relate to ordinary transactions, events and conditions, i.e., as part of normal day-to-day operations of an entity. These transactions are key in preparing an entity’s financial statements and providing systematic format of its business or activities. Routine transactions are usually recorded on the basis of different accounting concepts and principles including double entry system and accrual accounting.

Routine transactions are processed through the so-called transaction system, i.e., a collection of routine transaction records that can be used in various business processes. Nonroutine transactions, on the other hand, typically include events that don’t take place on a regular basis. The transaction system entails that routine transactions are entered in special journals – being a simple venue to record the most frequently occurring transactions. For example, there are four types of special journals that are frequently used by merchandising businesses: cash receipts journals, sales journals, purchases journals, and cash payments journals.

Entities use special journals to record repetitive transactions that has an effect on the same set of accounts and by nature have a consistent description.

Routine transactions: main examples

The main examples of routine transactions carried out by an entity include the following:

Activities

Unique financial activities such as:

sales.
purchases.
cash receipts.
cash disbursements.
payroll.

Events:

For example, adjusting entries are those made to align (re-adjust) financial statements with actual economic activity in order to ensuring accurate and transparent reporting. Such entries include accruals for revenue and expenses, deferrals for prepayments, estimates for depreciation and provisions for doubtful accounts.