Business transactions refer to exchanges involving something of economic value that take place between two or more separate entities from outside an organization. These transactions impact a company's assets, liabilities, and equity, as they typically involve a transfer of resources, rights, or obligations. For instance, when a company purchases inventory from a supplier, it results in a change in both assets (as inventory is acquired) and liabilities or equity (if the payment hasn't been made yet, or if it's financed through a loan, which increases liabilities). Similarly, when a company earns revenue by providing goods or services, it affects its equity positively.

In accounting, it's crucial that these transactions can be measured accurately and recorded consistently in the financial records. This ensures transparency and accountability, enabling stakeholders to understand the financial position and performance of the business over time. The information resulting from recording these transactions is used to prepare financial statements, such as the balance sheet, income statement, and cash flow statement, which provide insights into the financial health of the entity.