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प्रश्न
Explain the money measurement principle of accounting.
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उत्तर
- On the basis of this concept, only those transactions are recorded in accounts which can be expressed in terms of money. In other words, an event, however important it may be to the business, will not be recorded unless its monetary effect can be measured with a fair degree of accuracy.
- For example, the retirement of the chairman of the company cannot be recorded because it is not possible to measure the monetary effect of retirement except in terms of gratuity and other benefits payable to the chairman.
- Money is a common denominator. With the help of money, diverse items can be added together. The total value of assets, such as raw materials, machinery, land and buildings, furniture and fixtures, etc., can be measured in terms of money. Thus, money measurement concept helps to make accounting records homogeneous, relevant, simple and understandable.
संबंधित प्रश्न
According to the ______ Principle of accounting, transactions are recorded on the assumption that the business will exist for an indefinite period of time.
This principle suggests that every debit has a corresponding and equal credit.
According to this principle, accounts should be prepared in such a way that all the material information required by users of financial statements is clearly disclosed.
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"Fixed assets should be valued at the market price." Comment.
Explain the expense principle.
Explain the principle of consistency.
Name any four concepts of GAAP.
