Advertisements
Advertisements
Question
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?
Options
The Going Concern Concept
The Business Entity Concept
Money Measurement Concept
The Dual Aspect Concept
Advertisements
Solution
Money Measurement Concept
Explanation:
The Money Measurement Concept states that only transactions and occurrences that may be stated or quantified in monetary terms should be documented in the books of accounts. Even while the retirement of a highly talented manager is a big event that can have a profound impact on a company’s operations, it is a qualitative change whose financial impact cannot be objectively and accurately measured; hence, it must be completely removed from accounting records.
RELATED QUESTIONS
GAAP stands for ______.
Accounting principles are necessary due to which of the following reasons?
On the basis of this concept, only those transactions are recorded in accounts which can be expressed in terms of money.
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.
According to this principle, revenue is deemed to be realised when the goods have been transferred or the services have been rendered to a customer.
What is business entity concept of accounting?
Name the basic principles of accounting.
Discuss in brief the basic principles of accounting.
"Fixed assets should be valued at the market price." Comment.
Explain the money measurement principle of accounting.
