Money Measurement Concept is the accounting concept that only transactions that can be expressed in terms of money can be recorded in financial statements. This concept is important because it provides the basis for measuring business activity. Only those transactions that can be expressed in monetary terms are relevant to decision-making. Therefore, the money measurement concept is the foundation of double-entry bookkeeping and accrual accounting.
The money measurement concept is also known as the economic entity assumption, which states that a business should be treated as a separate entity from its owners. This assumption is important because it allows businesses to be measured and compared on a consistent basis.
The money measurement concept is important because it provides the basis for measuring business activity. Only those transactions that can be expressed in monetary terms are relevant to decision-making. Therefore, the money measurement concept is the foundation of double-entry bookkeeping and accrual accounting.