Money Measurement Concept Homework Answers
Accountancy students must have come across the Money Measurement Concept in their syllabus. It is one of the most important topics that we have learnt. But often, students face problem regarding this Money Measurement Concept. Various projects are assigned to students, and students find difficulty in finding proper money measurement concept homework answers.
In order to be able to do all these projects and assignments related to Money Measurement Concept, you must learn about this topic in details.
Step 1: Understanding what is Money Measurement Concept:
Money Measurement Concept is a measurability concept in accounting. It refers to the idea that financial statements would recognize only the events and transactions that monetary terms can measure.
This means that –
- Every event and transaction in a given financial statement should be reduced into a monetary currency unit.
- In case the event and transaction cannot be reduced to any suitable or reliable monetary value, it will not be included in the financial statements.
But at the same time, it must also be kept in mind that though these events and transactions are not included in the financial statements, they should still be considered in the overall assessment. This will help the assessor to get a complete idea of the financial performance of the entity and also determine its position.
Step 2: Knowing the Things that are usually not a part of Money Measurement Concept:
When you are on the way to finding money measurement concept homework answers, you will often need to understand the ideas and topics that are eliminated from the financial statements. This is basically for not being able to measure in terms of money. First, you need to realize that Money Measurement Concept only focuses on quantitative information and not on qualitative information.
Hence, the ideas or concepts that are usually associated with the qualitative information get omitted from the financial statement assessment. This is because such ideas cannot be measured in monetary terms. These include –
- Working conditions of employees
- Employee skill level
- Brand value
- Expected resale value of a patent
- Field service
- Product durability
- The quality of customer support
- Administrative process efficiency.
These ideas that cannot be quantified in monetary terms have no place in the financial statements. Therefore, they would be omitted from the assessment.
Step 3: Knowing the Limitations of Money Measurement Concept:
Whenever you are learning or executing a project on a certain topic, knowing its limitations is a must. Same goes with this Money Measurement Concept topic of accounting. Though Money Measurement Concept is one of the most important concepts in accounting, it is not free from limitations. There are quite a number of drawbacks that limit this concept from coming up with a clear financial assessment.
As an Accountancy teacher, I have often seen students not having a clear idea of the limitations of Money Measurement Concept. This reflects in their money measurement concept homework answers. Hence, I have discussed it briefly here.
The main limitation of this Money Measurement Concept is inflation. Inflation is an obvious and constant part of the economy. As a result, the value of money does not remain constant. It keeps changing over a certain period of time. Therefore, it can be said that when different items, transactions, and events are added to a financial statement at different periods of time, the values differ. They become diverse values.
Thus, when the true value or worth of a company is calculate from a financial statement, a clear and fair value cannot be obtained. What the statement reflects is an unfair value that does not stand the test of inflation over time.
Step 4: Learning the Advantages of Money Measurement Concept:
The advantages of Money Measurement Concept are many. As a student, you must know all about them, while writing your money measurement concept homework answers. This will help you complete your project with more confidence and fetch better marks. Teachers, online tutors and homework help companies always focus on conveying the advantages of a given topic. It helps in better understanding of what you are learning.
- Easily comparable:
The Money Measurement Concept is followed by all the small to large scale businesses. And since it is always expressed in monetary terms, it becomes absolutely easy for the user to compare the value of a company with that of another company.
- Calculating profit:
As all the units are measured in terms of money, it is easy to calculate profit. All that you have to do is, combine all the business transactions and you will get the profit of the business.
- Favorable for business:
Customer loyalty, brand value, etc. cannot be included in the financial statement. In terms of money; it prevents the customers from being misled. The monetary value might be upsetting or overestimated for the customers.
Step 5: Writing money measurement concept homework answers:
Now that you have clearly understood what Money Measurement Concept is, it will surely help you to write the money measurement concept homework answers. Follow what the topic demands. If you are not sure about how to start it or how to end it, you can always consult the professionals. Online tutors, as well as professional homework help solution companies, can certainly help you out. Make sure that your project contains fresh content without any plagiarism and is attractive to fetch more score. Use diagrams and charts to express your ideas. Such assignments are definitely more scoring.