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Question
Accounting transactions are recorded in terms of ________.
Accounting transactions are recorded in terms of ________.
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Solution
The correct option is A money
In accounting we can communicate only those business transactions and other events which can be expressed in monetary units. This is called monetary unit assumption. Therefore, only money or money's worth transactions are recorded in the books of account.
Non monetary events like death, dispute etc. may have a great influence on the organization but these factors will not form the part of accounts as they can be calculated on monetary basis.
We may simply say " wherever there is money, there is an accounting, no money, no accounting".
In accounting we can communicate only those business transactions and other events which can be expressed in monetary units. This is called monetary unit assumption. Therefore, only money or money's worth transactions are recorded in the books of account.
Non monetary events like death, dispute etc. may have a great influence on the organization but these factors will not form the part of accounts as they can be calculated on monetary basis.
We may simply say " wherever there is money, there is an accounting, no money, no accounting".
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