Commercial Applications
The retirement of manager of the company cannot be recorded in the book of accounts, because it is not possible to estimate the financial effect of retirement. Which accounting principle would be applicable for the above statement?
- The Going Concern Concept
- The Business Entity Concept
- Money Measurement Concept
- The Dual Aspect Concept
Answer
Money Measurement Concept
Reason — According to the Money Measurement Concept, only those transactions are recorded in the books of accounts which can be expressed in terms of money. The retirement of the manager, however significant, cannot be recorded because its monetary effect (apart from gratuity and other benefits) cannot be measured with a fair degree of accuracy.
Related Questions
According to the …………… principle of accounting, transactions are recorded on the assumption that the business will exist for an indefinite period of time.
- Business Entity Concept
- Dual Aspect
- Going Concern Concept
- Money Measurement Concept
Ledger is also called the ……………
- Journal book
- Principal book
- Account book
- Subsidiary book
With reference to the Dual Aspect Principle identify the correct option:
- Assets = Capital - Liabilities
- Liabilities = Assets + Capital
- Capital = Assets + Liabilities
- Capital = Assets - Liabilities
Which accounting principle specifies that business will exist for an indefinite period of time?
- The Money measurement principle
- The Business entity principle
- The Dual aspect principle
- The Going concern principle