What is an Accounting Event?
Usually seen on a financial ledger or when balancing checkbooks, an accounting event is a name for any transaction that changes the balance on a financial balance sheet. A vital step in financial record keeping, recording accounting events is a basic step used to keep track of the flow of money. Most people with a bank account record at least some accounting events. For an accountant, accounting events are part of a bookkeeping system designed to help keep track of the financial progress of an individual or a company. An accounting event can be positive or negative, indicating either an increase or decrease in the balance.
Accounting events can denote financial transactions that are either internal or external to the company. Internal transactions involve money exchanged within the company, and external transactions specify money spent outside the company. For example, if a discount retail store employee spills bleach on his work clothes and is given new clothes from the store, the accounting event would be an internal transaction. If an office runs out of printer toner and has to buy more, the printer toner purchase would be a negative external accounting event. When a company receives a payment that increases its financial balance, that denotes a positive accounting event.
Recording all accounting events is necessary in maintaining accurate financial information. A mistake in recording accounting events can cause suspicion, embarrassments and incurred fees if the oversight exceeds the financial resources in the account, causing an overdraft. Most individuals and companies record accounting events in accounting or financial planning software, on bank websites, or on checkbook balance ledgers. Good accounting event records can also help clear a company of wrongdoing in the event that its records are brought into question.
Though accounting is a clear way to keep accurate financial records and bank balance sheets, some account holders choose not to record events at their own financial risk. Individuals who wish to avoid bouncing checks without keeping an accurate ledger of accounting events may set up overdraft protection or keep enough extra money in their accounts to give them some financial slack in case of an error. While overdraft protection does come with a cost, it can keep an accountholder from experiencing higher costs caused by declined transactions, bounced check costs, or insufficient funds fees.
Less commonly, an accounting event can mean an event held by an accounting educational organization. These events are normally sponsored events hosted by accounting colleges or college accounting departments. Accounting events of this variety often refer to conferences or seminars that teach about accounting, but may also refer to fundraiser events held to raise money for accounting education.
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