Basic terminology of accounting
A machinery is purchased on 31rst march(end of accounting year.Whether is it considered as a transaction or an event? Many does answer it as an event.!
Why sir?Could u explain the reason?
Purchase of machinery can be expressed in terms of money and brings change in financial position of business entity As fixed assets(machinery) increases and current assets (cash) decreases. So it can be called as transaction. All the items which are shown in the balance sheet are events on balance sheet date which are results of the transaction incurred previously. For example machinery purchased is a transaction when incurred but the closing balance of machinery on balance sheet date is an event. Similarly closing stock arises from purchases net goods sold is arrived by physical count on balance sheet date is an event.