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Money Measurement Concepts

A facts or transactions which can be expressed in terms of money only recorded in Money Measurement concepts. In other words, it excludes Qualitative transaction such as working condition , Skilled labour, Health of the manager etc., Which is essential for smooth running of business operations.
  • It requires use of monetary unit as basis for measurement.

  • Different items are expressed in varied basis of Measurement.

For e.g. Land -500 Sq mts, Furniture- 2 sofa sets, 5 computer table etc.

Building - 20,000 sq feet of build up area

These, cannot be added to give useful information .But, by using rupee as a unit of measurement these can be expressed as

Land - 500 x 100 per Sq mts = 5, 00,000
Furniture - 2 x 2000 = 4,000
5 x 1,500 = 3,000
Building - 20,000 x 30 = 6, 00,000

Now, it is possible to add or subtract and use them for comparison.

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