Question

formation of a labour union is not recorded in the books of accounts. why? justify your answer.

Answer 1

Answer:

Formation of labour union is not recorded in the books of accounts because it is a qualitative thing .

Explanation:

Accounting means of collecting , summarising , analysing and reporting in monetary terms, information about business.

In accounting, only those transactions and events are recorded which are of a financial character. There are so many transactions in the business which are very important for business but which cannot be measured and expressed in terms of money and hence such transactions will not be recorded. For example : the quarrel between employees , experienced manager etc. formation of labour union is one such example. we know we cannot measures feelings , expressions ,experience. Though such things or events affect the business adversely but as no one can measure the effect of such things or events in terms of money, these will not be recorded in the books of accounts. Each transaction is recorded in the books in terms of money.