Question

"The basic measurement in accounting is money?
Identify and explain the assumption

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Answer 1

Answer:

Explanation:

Accounting transactions must have a monetary value. As per the money measurement concept, only those transactions which can be expressed in terms of money are to be recorded in the books of accounts.

Hence, we do not record the transactions which we cannot express in terms of money even if they are very important for the business.

For example, we do not record events like death, sentiments, efficiency, change in economic, industrial and fiscal policies of the government, change in fashion etc. in the books of accounts. Recording the transactions in monetary terms makes the information more useful.