The money measurement concept in accounting explained.

The money measurement concept in accounting explained

Accounting records only those transactions which can be expressed in monetary terms.

The importance of money measurement concept is that money provides a common denomination by means of which heterogeneous facts about a business enterprise can be expressed and measured in a much better way. For e.g. When it is stated that a business owns TZS.1,00,000 cash, 500 tons of raw material, 10 machinery items, 3000 square meters of land and building etc., these amounts cannot be added together to produce a meaningful total of what the business owns. However, by expressing these items in monetary terms such as TZS.1,00,000 cash, TZS.5,00,000 worth raw materials, TZS,10,00,000 worth machinery items, and TZS .30,00,000 worth land and building – such addition is possible. read more

Auditor – meaning

Auditor - meaning

The auditor is the name of the person who conducts the audit, usually the engagement partner or other members of the engagement, or, as applicable to the firm.

The auditor is responsible for planning, collecting audit evidence and issuing the audit reports. For financial statement audits, the auditor is usually someone with a qualification in financial accounting and who is approved by a professional body or laws to practice auditing. read more

Accrual basis – meaning

What is direct labour cost variances?

Accrual basis means a basis of accounting under which transactions and other events are recognized when they occur (and not only when cash or its equivalent is received or paid). Therefore, the transactions and events are recorded in the accounting records and recognized in the financial statements of the periods to which they relate. The elements recognized under the accrual basis are assets, liabilities, net assets/equity, revenue and expenses. read more

What is meant by expenses in accounting?

What is meant by expenses in accounting?



Expenses are cost incurred to purchase and pay for items such as labour, raw materials which are used in normal course of transaction. Expenses include:

 

  • Expenses arising in normal course of activities, such as the cost of sales and other operating costs, including the depreciation of non current assets. Expenses result in outflow of assets (such as cash and finished goods inventory) or the depletion of assets (for example the depreciation on non current assets)
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