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Question
According to money measurement concept, which of the following will be recorded in the books of accounts?
According to money measurement concept, which of the following will be recorded in the books of accounts?
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Solution
The correct option is D Cost of the Machinery
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. All such transactions or happenings
which can not be expressed in monetary terms, for example, the appointment
of a manager, do not find
a place in the accounting records of a firm. Hence, in the above case, only the cost of machinery will be 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.
All such transactions or happenings
which can not be expressed in monetary terms, for example, the appointment
of a manager, do not find
a place in the accounting records of a firm.
Hence, in the above case, only the cost of machinery will be recorded in the books of accounts.
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