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Which accounting concept assumes that all financial transactions will find a place in accounting as long as they can be expressed in monetary terms?
- a)Going Concern Concept
- b)Money Measurement Concept
- c)Matching Concept
- d)Dual Aspect Concept
Correct answer is option 'B'. Can you explain this answer?
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Which accounting concept assumes that all financial transactions will ...
The money measurement concept is an accounting concept that assumes that all financial transactions will find a place in accounting as long as they can be expressed in monetary terms. This means that only those business activities that can be quantified and measured in monetary units will be recorded in the financial accounts. Transactions or events that cannot be expressed in monetary terms, no matter how significant, will not be included in the financial statements.
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Which accounting concept assumes that all financial transactions will ...
Money Measurement Concept
The Money Measurement Concept is a fundamental accounting concept that assumes all financial transactions will find a place in accounting as long as they can be expressed in monetary terms. Here is a detailed explanation of this concept:
Importance of Monetary Terms
- The Money Measurement Concept is based on the principle that only those transactions and events that can be measured in monetary terms are recorded in the financial statements.
- This concept helps in ensuring that all financial transactions are consistently recorded and reported in a standardized manner, making it easier for users of financial statements to compare and analyze the financial performance of a business.
Limitations of the Concept
- One of the limitations of the Money Measurement Concept is that it does not take into account qualitative factors that may also be relevant in decision-making.
- Non-monetary factors such as employee satisfaction, customer loyalty, and brand reputation are not captured in the financial statements, even though they may have a significant impact on the overall performance of a business.
Example
- For example, if a company purchases a piece of machinery for $10,000, this transaction will be recorded in the financial statements because it can be expressed in monetary terms. However, if the company improves its customer service processes, this improvement will not be recorded in the financial statements because it cannot be measured in monetary terms.
In conclusion, the Money Measurement Concept is a crucial accounting concept that ensures all financial transactions are recorded and reported in a consistent and standardized manner as long as they can be expressed in monetary terms.
The Money Measurement Concept is a fundamental accounting concept that assumes all financial transactions will find a place in accounting as long as they can be expressed in monetary terms. Here is a detailed explanation of this concept:
Importance of Monetary Terms
- The Money Measurement Concept is based on the principle that only those transactions and events that can be measured in monetary terms are recorded in the financial statements.
- This concept helps in ensuring that all financial transactions are consistently recorded and reported in a standardized manner, making it easier for users of financial statements to compare and analyze the financial performance of a business.
Limitations of the Concept
- One of the limitations of the Money Measurement Concept is that it does not take into account qualitative factors that may also be relevant in decision-making.
- Non-monetary factors such as employee satisfaction, customer loyalty, and brand reputation are not captured in the financial statements, even though they may have a significant impact on the overall performance of a business.
Example
- For example, if a company purchases a piece of machinery for $10,000, this transaction will be recorded in the financial statements because it can be expressed in monetary terms. However, if the company improves its customer service processes, this improvement will not be recorded in the financial statements because it cannot be measured in monetary terms.
In conclusion, the Money Measurement Concept is a crucial accounting concept that ensures all financial transactions are recorded and reported in a consistent and standardized manner as long as they can be expressed in monetary terms.
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Which accounting concept assumes that all financial transactions will find a place in accounting as long as they can be expressed in monetary terms?a)Going Concern Conceptb)Money Measurement Conceptc)Matching Conceptd)Dual Aspect ConceptCorrect answer is option 'B'. Can you explain this answer? for B Com 2025 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Which accounting concept assumes that all financial transactions will find a place in accounting as long as they can be expressed in monetary terms?a)Going Concern Conceptb)Money Measurement Conceptc)Matching Conceptd)Dual Aspect ConceptCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for B Com 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which accounting concept assumes that all financial transactions will find a place in accounting as long as they can be expressed in monetary terms?a)Going Concern Conceptb)Money Measurement Conceptc)Matching Conceptd)Dual Aspect ConceptCorrect answer is option 'B'. Can you explain this answer?.
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