How Can We Explain The Term "Event" In Business Accountancy?

In ordinary language "Event" means anything that happens. Human life is full of events. So many events take place in the family and social life of a person. The events may be classified into two.

a) Monetary Events: Events which are related with money, i.e. which change the financial position of a person are known as "monetary events". For example, daily shopping, marriage ceremony, birthday anniversary, marriage anniversary etc.
b) Non-Monetary Events: Events which are not related with money i.e. which do not change the financial position of a person are known as "non-monetary events", For example winning a game, delivering a lecture in a meeting etc.

In business accounting only those events which change the financial position of the business and which call for accounting are recognized as "Events". In other words, all monetary events are regarded as business transactions.

Remember, it is not that anything which results in exchange of something will be regarded as transaction. On the other hand, something may be regarded as a transaction even though it involves no exchange. For example Robert sends a price-list to his customer, Jacky. This involves exchange of price-list between Robert and Jacky, yet it is not regarded as a transaction, because it is not measurable in terms of money and it does not change the financial position of both persons. Again, suppose, goods worth 1000 US$ are destroyed by fire.

This does not involve any exchange, yet it is regarded as a transaction, because it is measurable in terms of money and it changes the financial position of the business. It must be noted that an event, although measurable in terms of money, may not be regarded as a transaction. For example, we receive an order for supply of goods worth US$ 1000. Although it is measurable in terms of money, it is not regarded as a transaction, since it has not changed the financial position. It will, however, be regard as a transaction when the goods are supplied according to the order. This shows us that the event may be regarded as a transaction in Accounting.
1) The event must be measurable in terms of money.
2) The financial position of the business must change on account of that event.

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