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Money Measurement Principle GAAP
It is one of the principles of Generally Accepted Accounting Principles (GAAP). It is actually a Accounting Concept which states that Only those Business Transactions are recorded in the Books of Accounts that are expressed in terms of monetary value i.e., that is written in terms of money value in an event. For Example Mr. A sold goods worth Rs. 5000
for Cash is a monetary event as there is an exchange of Cash of Rs. 5000 for goods, but achieving good performance or getting good marks in an examination is not a monetary event as we can not express these kinds of events
in terms of money for exchange.
According to this concept, there is always a change or update in the monetary value of Different Kinds of Accounts whichever is involved in a business transaction. So, only those transaction are recorded in the financial records of the business that is related to
Quantitative Change and not Qualitative Change. For Example, we paid Salaries for cash Rs. 10000, then Cash is decreased by Rs. 10000 and Salaries are also increased by Rs. 10000, so there is a change in the value of Cash
and Salaries by Rs. 10000.
It is one of the principles of Generally Accepted Accounting Principles (GAAP). It is actually a Accounting Concept which states that Only those Business Transactions are recorded in the Books of Accounts that are expressed in terms of monetary value i.e., that is written in terms of money value in an event. For Example Mr. A sold goods worth Rs. 5000
for Cash is a monetary event as there is an exchange of Cash of Rs. 5000 for goods, but achieving good performance or getting good marks in an examination is not a monetary event as we can not express these kinds of events
in terms of money for exchange.
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