Introduction: Accounting is a process of recording, classifying, and summarizing financial transactions to provide financial information that is used to make business decisions. It involves keeping track of all financial activities and creating reports that can be used to evaluate the performance of a business. However, only financial transactions are recorded in accounting, and this statement needs to be explained in detail.

What are financial transactions? Financial transactions are activities that involve the exchange of money or other valuable assets between two or more parties. These transactions are recorded in accounting as they have a monetary value, and they can be measured and quantified. Examples of financial transactions include:

- Sales and purchases of goods or services
- Payment of wages and salaries
- Borrowing and lending of money
- Investment in stocks, bonds, and other securities
- Payment of taxes and other expenses

Why are only financial transactions recorded in accounting? Accounting focuses on the financial aspects of a business, and therefore, only financial transactions are recorded. These transactions can be measured in monetary terms, and they have a direct impact on the financial position of a business. Non-financial transactions, such as social and environmental activities, are not recorded in accounting as they do not have a direct impact on the financial performance of a business.

What are the benefits of recording financial transactions? Recording financial transactions provides several benefits, including:

- Accurate financial reporting
- Better decision-making
- Compliance with legal and regulatory requirements
- Improved financial management

Conclusion: In summary, accounting is a process of recording, classifying, and summarizing financial transactions. Only financial transactions are recorded in accounting as they have a direct impact on the financial position of a business. Recording financial transactions provides several benefits, including accurate financial reporting, better decision-making, compliance with legal and regulatory requirements, and improved financial management.

According to money measurement principle only those transaction are recorded in the accounting which can be measured in the monetary system. in other words non financial transaction or facts will never record in the accounting.