Basic Concepts in Accounting

Money Measurement Concept:

According this concept, only those transactions and facts find the place in the process of accounting and hence on financial statements which can be expressed in terms of money. As such, all those transactions and facts which cannot be expressed in terms of money (e.g. Morale and motivation of the workers, goodwill of the organisation in the market etc.) are not within the purview of accounting though they may be having direct or indirect bearing on the business. This principle imposes severe restrictions on the kind of information available from the financial statements. In fact, it is the major drawback of the financial statements.