Question

What is the money measurement concept? Which one factor can make it difficult to compare the
monetary values of one year with the monetary values of another year?

Answer 1

The money measurement concept states the transactions in the monetary terms. Inflation is a factor that can create difficulty while comparing the monetary values of a year with the values of another year.

Explanation:

The money measurement concept states the transactions and events that are of monetary terms. It tells that the record of the transactions should be kept in monetary terms or not in physical units.

For instance, 2 machines purchased in a enterprise are of 50,000. Now, under money measurement concept, this transaction would be recorded with an amount of 50,000.

Inflation is a factor that can create difficulty while comparing the monetary values of a year with the values of another year. Inflation creates difficulty because of the changes in prices.

For example, the original value of the money or a currency does not stay similar over a time period.