Accounting – Accounting Concepts
We wrote about two basic concept of accounting, i.e. going concern and business entity.
The third is “Monetary measurement” – Should be measurable in money.
You can record a transaction in accounting books only if it is measurable in terms of money. This essentially implies that mostly tangible things or services, that can be quantified in money terms can only be recorded. Sometimes, non-tangible stuff, like knowhow or the knowledge of a research is also recorded, but then with a basic principle – record it in money terms, either through a justified analysis or by ad-hoc quantification. Thus, monetary measurement will form a critical basis which forms the essential linkage for any transaction to qualify as a candidate of accounting.
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