GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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As per this concept, a transaction is recorded at its money value on the date of occurrence and the subsequent changes in the money value are conveniently ignored.
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Any transaction / event inspite of being very important cannot be recorded in the books of accounts, if it cannot be expressed in money value.
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Both (a) and (b)
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None of the above
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Detailed explanation-1: -Due to this concept of money measurement, many facts, events, and items are not mentioned in the accounting records of a company. This leads to the absence of these events and items on the financial statements as well.
Detailed explanation-2: -Monetary Measurement Limitations Inflation: The monetary measurement concept does not account for inflation, which can have a significant impact on a company’s financial statements over time. Foreign exchange rates: The concept also does not account for changes in foreign exchange rates.
Detailed explanation-3: -It can measure money supply or the total amount of currency in circulation in two ways: the amount of currency in circulation and the amount of credit or deposits in banks. The second way of measuring money supply is the velocity of money, which means the amount of currency per unit of time.
Detailed explanation-4: -The money measurement concept (also called monetary measurement concept) underlines the fact that in accounting and economics generally, every recorded event or transaction is measured in terms of money, the local currency monetary unit of measure.
Detailed explanation-5: -Money measurement concept Example 100000, Rent Paid Rs. 10000 etc. are expressed in terms of money, and so they are recorded in the books of accounts. But the transactions which cannot be expressed in monetary terms are not recorded in the books of accounts.