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Certain fundamentals on which accounting is based on are known as accounting concepts or accounting principles. Some of them are as follows: 1. Entity concept 2. Going concern concept 3. Money measurement concept 4. Accounting period concept 5. Dual aspect concept 6. Realization concept 7. Full disclosure concept etc.
The concept of money measurement is that the records of the transactions are to be kept not in the physical units but in the monetary unit. E.g., 10 machinery of Rs.1,00,000 each are purchased and this event is recorded in the books with a total amount of Rs.1,00,000.
Money Measurement concept of accounting theory is based on the assumption that the value of money will remain constant. Money Measurement also known as measurability concept means that only transactions and events that are capable of being measured in terms of money are recorded in the books of accounts.
The concept of money measurement states that only those transactions and happenings in an organisation which can be expressed in terms of money such as sale of goods or payment of expenses or receipt of income, etc. are to be recorded in the book of accounts.
The Money-measurement concept states that only those transactions shall be recorded in the books of accounts which can be measured in monetary terms. Therefore, non-monetary transactions shall not be recorded in the books of accounts, for example, the death of the key manager.
The concept of money measurement states that only those transactions and happenings in an organisation which can be expressed in terms of money such as sale of goods or payment of expenses or receipt of income, etc. are to be recorded in the book of accounts.
Here, one separate entity (owner) is assumed to be giving money to another distinct entity (business unit). Similarly, when the owner withdraws any money from the business for his personal expenses (drawings), it is treated as reduction of the owner’s capital and consequently a reduction in the liabilities of the business.
The principle of full disclosure requires that all material and relevant facts concerning financial performance of an enterprise must be fully and completely disclosed in the financial statements and their accompanying footnotes.
The concept of money measurement states that only those transactions and happenings in an organisation which can be expressed in terms of money such as sale of goods or payment of expenses or receipt of income, etc. are to be recorded in the book of accounts.
The concept of money measurement states that only those transactions and happenings in an organisation which can be expressed in terms of money such as sale of goods or payment of expenses or receipt of income, etc. are to be recorded in the book of accounts.
