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Could You Describe The Money Measurement Concept Of Accounting?

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Thomas Rooney Profile
Thomas Rooney answered
Accountancy is a skilled profession that requires a lot of technical thought when it comes to figures. This is crucial in making important decisions in this sector, but there are lot of opportunities to develop your career, from auditing a company, to business development and winning business for your particular enterprise.

Yet you will need to have a head for figures and a good understanding of finance to really succeed in this sector. With regards to the money management concept, it is a clear view that all assets of the business should be presented in money terms, which includes all transactions and events that can be measured in money terms.

The measured changes in standard purchasing power are not considered sufficiently important to require adjustments to the simple financial statements.

The money measurement concept emphasises the fact that in accountancy, every recorded event or transaction is measured in money. So, by using this principle, a fact or a happening which cannot be deemed in financial or fiscal terms is not recorded in the accounting books and hence it is not possible to record such non-quantifiable things which might include employee skill levels or the level of customer service.

One of the most fundamental principles in accounting is ‘The Measuring Unit principle’ which corresponds to the most basic unit of the chosen currency.

This principle also signifies that the measure unit is stable and it does not require significant change to the basic financial statements. In essence, money is a unit which is utilised as the basic measuring unit for financial reporting. Yet a particular resource will only be measured as an asset and included in the balance sheet if it can be highlighted in economic terms.
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Anonymous answered
It holds that transactions and events that can be measured in money terms alone are recorded in the books of account.the principle also assumes the unit of measured is stable i.e changes in general purchasing power are not considered sufficiently important to require adjustments to the basic financial statements.
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Anonymous answered
Cost concern concept
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Anonymous answered
In financial accounting a record is made only of information that can be expressed in monetary terms.

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