This discussion of the kind of knowledge acquired by a novice learning BASIC programming and how this knowledge may be most efficiently acquired suggests that people who do programming acquire three basic skills that are not obvious either in instruction or in traditional performance: (1) the ability to analyze each statement into a type of prestatement, (2) the ability to enumerate the transactions involved for each prestatement, and (3) the ability to chunk prestatements into general clusters or configurations. The instructional implications of a psychological analysis of the basic concepts underlying performance in BASIC programming are considered, and an alternative instructional approach--the "transactional approach"--is recommended for teaching programming. This approach involves teaching the underlying concepts of transactions, prestatements, and chunks using a concrete model of the computer, before emphasizing hands-on learning. It is argued that once the student has acquired the relevant subsuming concepts, the relationship between program and output will be more meaningful. Nine references are listed, and appendices include the eight levels of knowledge for BASIC; examples of transactions, prestatements, and chunks and diagrams of the traditional and transactional approaches. Other publications in this report series are listed. (MER)