Answer :
Final answer:
Internal Financial Transaction involves exchanges where one party provides value now in anticipation of receiving value later, essential for managing cash flows in businesses.
Explanation:
Internal Financial Transaction refers to a transaction where there is no immediate flow of cash, but requires a future flow of cash. It involves exchanges where one party provides something of value now, with the expectation of receiving something of value later.
For example, a company may enter into a contract to purchase raw materials on credit, meaning they receive the materials immediately but pay for them at a later date. This represents an internal financial transaction as it involves a promise of future payment.
Understanding internal financial transactions is crucial for businesses to manage their cash flows and financial obligations effectively.
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