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According to money measurement concept, which of the following will not be recorded in the books of accounts?
- a)extra profits arising out of revaluation of assets
- b)commission payable to a salesman
- c)quality of the products
- d)all of these
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
According to money measurement concept, which of the following will no...
According to the money measurement concept, only those transactions that can be measured in terms of money are recorded in the books of accounts. If any business transaction cannot be measured in terms of money, then it will not be recorded in the books of accounts.
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According to money measurement concept, which of the following will no...
Money Measurement Concept and Exclusions in Accounting
Money measurement concept is one of the fundamental accounting principles that states only transactions that are measurable in monetary terms should be recorded in the books of accounts. This concept ensures that only those transactions that can be expressed in terms of money are recognized in the financial statements, as it is the most common unit of measurement used in business.
Exclusions in Accounting
There are certain transactions or events that are significant for the business but cannot be recorded in the books of accounts due to the money measurement concept. Such exclusions include:
1. Quality of the Products: The quality of the products is an important factor that affects the business but cannot be measured in monetary terms. Therefore, it cannot be recorded in the books of accounts.
2. Commission Payable to a Salesman: Commission payable to a salesman is a liability and can be expressed in monetary terms. However, it may not be recorded in the books of accounts until it is earned by the salesman.
3. Extra Profits Arising out of Revaluation of Assets: Revaluation of assets can lead to an increase in their value, which results in an increase in profits. However, this increase in profits cannot be recorded in the books of accounts until the assets are sold.
Conclusion
In conclusion, the money measurement concept plays an important role in accounting as it ensures that only transactions that can be expressed in monetary terms are recorded in the books of accounts. Therefore, exclusions such as the quality of products, commission payable to a salesman, and extra profits arising out of revaluation of assets cannot be recorded in the books of accounts.
Money measurement concept is one of the fundamental accounting principles that states only transactions that are measurable in monetary terms should be recorded in the books of accounts. This concept ensures that only those transactions that can be expressed in terms of money are recognized in the financial statements, as it is the most common unit of measurement used in business.
Exclusions in Accounting
There are certain transactions or events that are significant for the business but cannot be recorded in the books of accounts due to the money measurement concept. Such exclusions include:
1. Quality of the Products: The quality of the products is an important factor that affects the business but cannot be measured in monetary terms. Therefore, it cannot be recorded in the books of accounts.
2. Commission Payable to a Salesman: Commission payable to a salesman is a liability and can be expressed in monetary terms. However, it may not be recorded in the books of accounts until it is earned by the salesman.
3. Extra Profits Arising out of Revaluation of Assets: Revaluation of assets can lead to an increase in their value, which results in an increase in profits. However, this increase in profits cannot be recorded in the books of accounts until the assets are sold.
Conclusion
In conclusion, the money measurement concept plays an important role in accounting as it ensures that only transactions that can be expressed in monetary terms are recorded in the books of accounts. Therefore, exclusions such as the quality of products, commission payable to a salesman, and extra profits arising out of revaluation of assets cannot be recorded in the books of accounts.
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According to money measurement concept, which of the following will not be recorded in the books of accounts?a)extra profits arising out of revaluation of assetsb)commission payable to a salesmanc)quality of the productsd)all of theseCorrect answer is option 'C'. Can you explain this answer?
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According to money measurement concept, which of the following will not be recorded in the books of accounts?a)extra profits arising out of revaluation of assetsb)commission payable to a salesmanc)quality of the productsd)all of theseCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about According to money measurement concept, which of the following will not be recorded in the books of accounts?a)extra profits arising out of revaluation of assetsb)commission payable to a salesmanc)quality of the productsd)all of theseCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for According to money measurement concept, which of the following will not be recorded in the books of accounts?a)extra profits arising out of revaluation of assetsb)commission payable to a salesmanc)quality of the productsd)all of theseCorrect answer is option 'C'. Can you explain this answer?.
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