 Transaction & Event

Event: Event refers to a process or part of a process having a particular moment and a place
of occurrence. There are two types of event.
i) Monetary Event: Events that are related to money are called monetary event. Monetary
events can change the financial position of an enterprise. For example: daily expenses, salary
paid, goods purchase etc.
ii) Non-Monetary Event: These events are not related to money or not measurable in
monetary term. Non- monetary event does not change the financial position of an enterprise.
For example: place an order, win a match etc.

Transaction:
Transactions are events that (i) cause in an immediate change in the financial resources or
obligations of the business (ii) can be measured objectively in money terms and (iii) Each
transaction must have a dual effect on the accounting equation.

 Characteristics of transaction are as follows:

 Transaction must be expressed in terms of money
 Must be independent
 Must have two parties
 Change in financial position
 Must have source documents
 May be invisible

 Accounting & Book Keeping:

Differences between accounting & bookkeeping are as follows-
Book-keeping Accounting
1. The process of recording business 1. The process of identifying, measuring, and
transactions communicating economic information
2. It is a clerical job 2. It is an analytical job
3. Bookkeeping is a preliminary task 3. Accounting is advanced task
4. Bookkeeping is the part of Accounting 4. Accounting is more wider than bookkeeping
5. It does not help to make decision 5. It helps to make decision

 Purposes of Accounting

1. Maintain the permanent record of business transactions.

2. Ascertain the net profit or loss of the enterprise for the accounting period.
3. Determine the value of business assets and liabilities of the enterprise.
4. Disclose the financial position of the enterprise in the balance sheet date.
5. Cost control
6. Give necessary information to management for decision making.
7. Delivery information to various users in useful format
8. Help to make a future plan
9. Determine income tax, sales tax, VAT etc.