Question

Money measurement concept of accounting theory is used only when transactions can be expressed in terms of __________.

• A. Money
• B. Commodities
• C. Events
• D. None of the above

Answer 1

The correct option is A Money

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.

Another important aspect of the concept of money measurement is that the records of the transactions are to be kept not in the physical units, or on basis of their events, but in the monetary unit.