Question

The Money Measurement Concept allows the recording of non-monetary transactions, such as the reputation of a company, as long as they are significant to the business.

Options

• True

• False

Answer 1

False

Explanation:

The Money Measurement Concept explicitly prohibits the recording of non-monetary transactions, regardless of their significance to the business. While qualitative variables such as a strong corporate reputation, brand loyalty, or managerial ability are extremely significant, they cannot be ascribed an objective, precise monetary value and hence are completely removed from a company’s financial accounting books.