CS Executive · Corporate Accounting and Financial Management · Introduction to Accounting
Which one of the following events would NOT be recorded in the books of Kapoor Industries Ltd. because of the money measurement concept?
The resignation of a highly skilled production head is not recorded. The money measurement concept allows only events that can be expressed in money to be recorded, and a person's skill cannot be reliably valued in rupees, unlike the purchases, receipts and payments.
- APurchase of machinery on credit for ₹3,00,000
- BReceipt of interest on investments of ₹15,000
- CResignation of a highly skilled production head whose skill cannot be expressed in rupeesCorrect
- DPayment of salaries of ₹80,000
Explanation
Money measurement permits recording only transactions that can be expressed in monetary terms. The skill of a manager cannot be reliably measured in money, so it is not recorded. The other three are monetary transactions and are recorded.
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