MONEY MEASUREMENT PRINCIPLE
Submitted by
ANKITA BAL
PRN: 21010224203, Division: A, Batch: 2021-26, Programme: BBA LLB,
Academic Year 2021-22
Symbiosis Law School, NOIDA
Symbiosis International (Deemed University), PUNE
In
November, 2021
Under The guidance of
Dr. Meenakshi Kaul
Professor
SYMBIOSIS LAW SCHOOL, NOIDA
Sec-62, Block-A, 47 & 48, NOIDA-201301 (U.P.)- India
INDEX
Sl. No. Particulars Pg. No.
1 Certificate 3
2 Acknowledgement 4
3 Introduction 5
4 Money Measurement Principle: A Brief Study 6
5 Conclusion 7
CERTIFICATE
The Project Titled “Money Measurement Principle” submitted to the Symbiosis
Law School, NOIDA for Business Accounting as part of Internal Continuous
Evaluation is based on my original work carried out under the guidance of Dr.
Meenakshi Kaul, Professor, SLS Noida from 1 st Oct, 2021 to 11th Nov. 2021. The
research work has not been submitted elsewhere for award of any degree.
The material borrowed from other sources and incorporated in the research paper
has been duly acknowledged.
I understand that I myself would be held responsible and accountable for
plagiarism, if any, detected later on.
ANKITA BAL
Date: 12 Nov. 2021
ACKNOWLEDGEMENT
First and foremost, I'd want to express my sincere thanks to Dr. Meenakshi Kaul
for assisting me and serving as my guiding light throughout this effort. They gave
me with excellent knowledge that enabled me in grasping all of the fundamentals
of this project, as well as resolving any concerns I had about the project. I would
also want to appreciate the library department and academic support of Symbiosis
Law School, Noida for providing me with various research sources and resources
to assist me create the most unique project possible. I'd also want to thank
Symbiosis Law School in Noida for giving me this project. so that I could learn the
essential knowledge about Business Studies simply, competently, and completely.
INTRODUCTION
Money measurement principle or the monetary measurement principle affirms that the books of
business and businesses itself can only record transactions with money as a measuring unit, that
is, the transaction is expressed in terms of money. Any event occurring that cannot be expressed
in terms of money is not recorded in the books of accounting. This draws attention to the fact
that accounting lays emphasis on quantitative information rather than qualitative information.
Non-quantifiable items are never recorded in financial statements or transactions of accounting.
Examples being that values like excellent customer support is never recorded or dealt with in
accounting.
MONEY MEASUREMENT PRINCIPLE: A BRIEF STUDY
Since money is the basic medium of exchange for goods, the valuation and recording of financial
statements or transactions becomes easier when recorded in terms of money. Thus, all costs are
attributed in terms of monetary value and the exchange of goods recorded in accounting are also
evaluated in terms of money.
However, it is to be noted that accounting does not record the change in the values of currency
that changes the purchase value of an item, thus, failing to record the true value of the money lost
or gained by an individual or organization for a transaction. Also due to the principle stating the
exclusion of non-quantifiable items in accounting statements, the attributes that an organization
has which greatly benefits a buyer or the organization is not reflected in the transaction due to
the lack of monetary value. The non disclosure of these intangible assets (company
accountability, skills of the workforce, efficiency of the organization) fails to represent the true
value of the organization. Thus, money measurement principle to an extent also fails in reflecting
the true value of such transactions.
The disadvantages of this principle however do not negate the utility and significance of this
principle as it has made the record of financial statements simpler and easier. The principle helps
us to compare similar transactions to estimate the true value of transactions that are similar in the
exchange of money for an item that is common in the transactions in question that are being
compared. Also, shareholders and investors can easily invest in areas where the company has to
develop or the resources that a company requires by evaluating a correct estimation of the value
at which they are to be bought.
CONCLUSION
In short, the money measurement principle can lead to financial statements being issued that do
not fully predict a business' future ups and downs. If the principle was not put to effect in
accounting, people could easily manipulate transactions to add intangible assets that only
contribute to the value of the transaction in an insignificant amount.
Thus, the project has defined and elaborated on money measurement principle and effectively
discussed the utility and criticisms of the money measurement principle.
