As
per this concept all business transactions must be in terms of money. Thus, as
per the money measurement concept, transactions which are of financial nature are
only recorded in the books of accounts and non-financial transactions do not
find any place in accounting books.
For example, sale of goods worth Rs.100000,
purchase of raw materials Rs.200000, Rent Paid Rs.2000 etc. are expressed in
terms of money, and so they are recorded in the books of accounts. But the
transactions which cannot be expressed in monetary terms are not recorded in
the books of accounts. For example, sincerity, loyality, honesty of employees are
not recorded in books of accounts because these cannot be measured in terms of
money although they do affect the profits and losses of the business concern.
Money Measurement Concept
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