Economic events can be classified as external events and internal events. If a transaction occurs between an outsider and the organization it is termed as an external event like purchases made from suppliers, sales made to customers, etc. When a transaction occurs internally i.e. from one department to another or within the organization then it is termed as an internal event like a supply of raw material to the other department. From the above definitions, it can be inferred that in accounting only transactions of financial nature are recorded.
Transactions like the purchase of machinery, payment of salaries, wages, purchase of raw material, sale of goods, etc. all are examples of economic events.
The role of accounting has changed over the amount of your time. In the modern world, the role of accounting is not only limited to record financial transactions but also to provide information…