BUSINESS TRANSACTION AND EVENT IN ACCOUNTING
BUSINESS TRANSACTION
A business transaction is an economic activity of the business that changes its financial position .Wherever any business transaction takes place ,it results in a change In the value of some of the assets, liabilities or capital.
Features of business transaction
- It involve some economic activities when goods are sold or purchased or some expense are paid
- Transaction are of two types internal and external transaction .External transaction involves economic activities between two parties such as purchase sales etc. Whereas internal transaction involves transaction entirely within business such as depreciation on fixed assets
- Only those activities are recorded which can be measure in terms of money only.
EVENTS:
An event is the consequence or result of transaction for example If A Purchase goods worth Rs 100000 and sold it to B for B Rs 150,000 . These are two transaction of purchase and sale and the profit or loss earned is the event of transaction here 50,000 is the profit which is the event of transaction
DIFFERENCE BETWEEN BUSINESS TRANSACTION AND EVENT
Transaction | Events |
A business transaction is an economic activity of the busines | An event is the consequence or result of transaction |
It changes its financial position | It may or may not changes its financial position |
Transaction is measure in term of money | events may or may not be measurable in terms of money. |
The scope of the transaction is limited. | The scope of the event is very wide. |
Business transactions must be supported by evidence. | Transactions related to events are not always supported by evidence. |