Commerce Exam > Commerce Videos > Accountancy Class 11 > Money Measurement Concept
Money Measurement Concept Video Lecture | Accountancy Class 11 - Commerce
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64 videos|153 docs|35 tests
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FAQs on Money Measurement Concept Video Lecture - Accountancy Class 11 - Commerce
| 1. What is the money measurement concept? |  |
Ans. The money measurement concept is an accounting principle that states that all business transactions should be recorded in monetary terms in the financial statements. This concept assumes that only transactions that can be expressed in monetary values are considered relevant and can be objectively measured and compared.
| 2. Why is the money measurement concept important in accounting? | |
Ans. The money measurement concept is important in accounting as it allows for the uniform and consistent measurement of business transactions. By expressing transactions in monetary terms, it becomes easier to record, analyze, and compare financial information. It also helps in assessing the financial performance and position of a business.
| 3. How does the money measurement concept affect non-monetary assets? | |
Ans. The money measurement concept does not apply to non-monetary assets such as goodwill, patents, trademarks, or customer loyalty. These assets are not recorded in the financial statements since their value cannot be objectively measured in monetary terms. However, if these assets are acquired through a monetary transaction, their cost can be recorded.
| 4. Can the money measurement concept be a limitation in financial reporting? | |
Ans. Yes, the money measurement concept can be a limitation in financial reporting. It restricts the inclusion of important qualitative information that cannot be expressed in monetary terms, such as the skills and expertise of employees or the reputation of a company. This limitation can affect the overall usefulness and relevance of financial statements.
| 5. How does the money measurement concept affect the valuation of inventory? | |
Ans. The money measurement concept requires the valuation of inventory at its cost or net realizable value, whichever is lower. This means that the historical cost of acquiring or producing inventory is recorded, and any subsequent changes in its market value are not reflected until it is sold. This conservative approach ensures that inventory is not overstated in the financial statements.
Text Transcript from Video
money measurement concept only monetary
transactions only transactions which can
be measured in terms of money only
transactions which can be measured in
terms of money can be recorded in the
books of account if recorded in the
currency of the country in which the
books are kept any other transaction
however important it may be any other
transaction too vital to the business
organization will not find a place in
the books of the business organization
suppose suppose a manager who runs the
business he is the all in all of the
particular business for some reason he
is to leave the entire business all the
other employees in the organization all
depend on this one person the very
continuity of the business may be in
question if this particular person
leaves an event of such an such great
importance cannot be recorded in the
books of account because it cannot
really be measured in terms of money the
loss of his leaving cannot be recorded
in terms of money if we buy machinery
for one life I know that the cost of
machinery is 1 lakh has been measured in
terms of money there is a value to that
machinery it can be recorded but this
manager leaving though is of crucial
importance very very important even in
the for the business it cannot find a
place in the books of account
transactions only transactions which can
be measured in terms of money only
transactions which can be measured in
terms of money can be recorded in the
books of account if recorded in the
currency of the country in which the
books are kept any other transaction
however important it may be any other
transaction too vital to the business
organization will not find a place in
the books of the business organization
suppose suppose a manager who runs the
business he is the all in all of the
particular business for some reason he
is to leave the entire business all the
other employees in the organization all
depend on this one person the very
continuity of the business may be in
question if this particular person
leaves an event of such an such great
importance cannot be recorded in the
books of account because it cannot
really be measured in terms of money the
loss of his leaving cannot be recorded
in terms of money if we buy machinery
for one life I know that the cost of
machinery is 1 lakh has been measured in
terms of money there is a value to that
machinery it can be recorded but this
manager leaving though is of crucial
importance very very important even in
the for the business it cannot find a
place in the books of account
About this Video
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Dec 22, 2024 Last updated |
Video Description: Money Measurement Concept for Commerce 2024 is part of Accountancy Class 11 preparation.
The notes and questions for Money Measurement Concept have been prepared according to the Commerce exam syllabus.
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Introduction of Money Measurement Concept in English is available as part of our Accountancy Class 11 for Commerce & Money Measurement Concept in
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Video Lecture & Questions for Money Measurement Concept Video Lecture | Accountancy Class 11 - Commerce - Commerce full syllabus preparation | Free video for Commerce exam to prepare for Accountancy Class 11.
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