Money Measurement Concept

The money measurement concept underlines the fact that in accounting every worth recording
event happening or transaction is recorded in terms of money. In other words, a fact or
a happening which cannot be expressed in terms of money is not recorded in the accounting
books. General health condition of the chairman of the company, working condition in which
a worker has to work, sales policy pursued by the enterprise, quality of products introduced
by the enerprise, etc., cannot be expressed in money terms and therefore are not recorded in
the books. In view of the above condition this concept puts a serious handicap on the usefulness
of accounting records for management decisions.
This concept has another serious limitation and is currently attracting the attention of the
accountants all over the world.
As per this concept, a transaction is recorded at its money value on the date of occurance
and the subsequent changes in the money value are conveniently ignored.