Question

Which of the following is/ are fundamental concepts?

• A. The entity concept
• B. The money measurement
• C. Both (A) and (B)
• D. None of these.

Answer 1

Answer: (C)

Both (A) and (B)

1. The concept of business entity assumes that business has a distinct and separate entity from its owners. It means that for the purposes of accounting, the business and its owners are to be treated as two separate entities.

2. 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.

Both are fundamental concepts of accounting.