Question

According to money measurement concept, which one of the following will be recorded in the books of accounts ___________________.

• A. Excellent morale of workers
• B. Quality control in the business
• C. Managing ability of the manager
• D. Cost of machinery

Answer 1

Answer: (D)

Cost of 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, capabilities of its human resources or creativity of its research department or image of the organisation among people in general do not find a place in the accounting records of a firm.
In the above case, only the cost of machinery is measurable in terms of money. Hence, only option (D) is acceptable for recording in the books of accounts.