Explain the concept of money measurement with example. - Vidyadip

Question

Explain the concept of money measurement with example.

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Answer

According to this concept each and every financial transaction will be recorded in the books of accounts in terms of money only as it is accepted as common measurement unit. The transactions which cannot be measured in terms of money will not be recorded in the books of accounts. Examples: $(1)$ Instead of recording physical quantity of goods sold, the sales will be recorded at monetary value of such goods. $(2)$ When wages are paid based on number of hours or days worked to different workers, the transaction will be recorded in books of accounts based on the monetary amount involved. $(3)$ No accounting entry is recorded for strike by factory, workers even if it is an important event affecting business. $(4)$ No accounting entry is recorded in books of A/c for resignation of a competent &efficient production manager that may adversely affect the production

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