Commercial Applications
On the basis of this concept, only those transactions are recorded in accounts which can be expressed in terms of money.
- Money measurement concept
- Accounting period concept
- Business entity concept
- Realisation concept
Answer
Money measurement concept
Reason — The Money Measurement Concept states that only those transactions which can be expressed in terms of money are recorded in the books of accounts. Money serves as a common denominator that makes accounting records homogeneous, relevant, simple and understandable.
Related Questions
Regarding fundamental accounting principles, which statement accurately reflects the "Entity Concept"?
(1) The Entity Concept emphasizes that a business's financial activities should be reported separately from the personal finances of its owners.
(2) The Entity Concept dictates that all transactions should be recorded using a single currency.
(3) The Entity Concept suggests that the money withdrawn by the proprietor from the firm for his personal use should be treated as drawings.
(4) The Entity Concept focuses on matching revenues and expenses to determine net income.
- Only 1
- 2 & 3
- Only 4
- 1 and 3
Ms. Mira is auditing a company's financial statements and notices that no footnotes have been provided for significant liabilities. Which accounting principle is most likely being violated?
- Matching Principle
- Revenue Recognition Principle
- Principle of Full Disclosure
- Conservatism Principle
This concept assumes that the business will continue to exist for a long time in the future.
- Money measurement concept
- Going concern concept
- Business entity concept
- Realisation concept
It is due to this concept that financial statements are prepared at regular intervals, generally one year.
- Money measurement concept
- Accounting period concept
- Business entity concept
- Realisation concept