Events and Transactions in Accountancy

This article will give you a brief understanding and difference between events and transactions from the accounting point of view.


In ordinary language an event means an occurrence that causes a change in the previous condition of any object or entity. For the purpose of accounting different authors define it in different ways.

Event is a bundle of transactions or financial activities that ends with the end of the purpose for which the same is made to occur. Some people are also of the opinion that a typical event is a transaction with an outsider.


A Transaction is an event that causes a transfer of values. One of the party receives some value and other gives up such value. If a monetary change in the affairs of a concern alters its financial condition, such change is regarded as a transaction. Is recorded in the books of accounts.

According to Yorston, Smith and Brown, “A transaction is an event involving transfer of money or money’s worth, the recognition of which gives rise to a record in the books of accounts.”

Comparison between Events and Transactions

  • For accounting purposes, an event denotes a monetary change in the affairs of a concern or entity. A transaction is an event which is recognised and recorded in the books of accounts.
  • An event may be a bundle of transactions or activities. Such activities are undertaken for a definite purpose. The event is completed when such purpose is attained.
  • For example, the main event may be ‘Marriage’ of a person and the bundle of transactions under it may be purchase of jewellery, payment to caterers for serving dinner to guests, payment to the marriage hall etc. on account of the marriage (i.e the main event). The event ends with the end of the marriage i.e when the purpose is attained.
  • Transactions are events which can be measured in terms of money. It causes a change in the financial position of the party concerned.

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