Masters are one time definitions to classify transactions and standardize the chart of accounts, to extract reports in more meaningful way. If Masters are not created with proper understanding, getting correct information becomes difficult.
A Transaction refers to a single monetary event of an organisation eg. a payment, a sale, a purchase etc. These transactions are then summarised to create system generated reports.
Reports helps the users to analyze the performance of the business in various aspcets, making it easy for the business owners to have full knowledge of their financial situations.