Differentiate between event and transaction

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Let us understand what is an event and a transaction, before learning about their differences.


It involves exchange of goods/services for value between more than one party, firm or accounts and is called financial transactions. A transaction has monetary impact on the financial statements. Transactions are recorded in books of accounts.

A transaction which is related to purchasing of goods or selling of goods, payments to creditors etc. are called business transactions. Types of accounting transactions are cash transactions and credit transactions.


Event is nothing but the final outcome of business activity, which affects the account balances of a company. If there is any increase of asset or decrease of asset or change in liabilities, then we can say an accounting event has taken place.

Internal events and external events are types of business events. Internal events take place within an organisation, whereas external events take place within external organisations.


The major differences between an event and a transaction are as follows −

Not all events are transactions.
All transactions are events.
Change in financial position of an organization/business, may or may not occur through an event.
There will be financial change.
Change may or may not be measurable in monetary terms.
Change is measurable in monetary terms.
For an event to occur, two parties may or may not be required.
Two parties are a must for a transaction.
Used in a wider sense.
Used in a narrow sense.
Goods transfer/service may or may not occur in an event.
Good transfer/service is a must.
An event is not necessarily recorded in books of accounts.
Every transaction is recorded in books of accounts.
Only cash transactions are carried out.
Both cash and credit base transactions could be done.
Cash statements, statements for payments and receipts separately, final statements for payments and receipts are accounting principles of events.
Journalizing, ledger, and financial statements are involved in the accounting process.
It has a very wide scope.
It has very limited scope.
Evidence is not always necessary for transactions.
Evidence is necessary for business transactions.
Updated on 09-Jul-2021 13:15:58