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Question
“Only monetary transactions are recorded in accounting”. Explain the statement.
Solution
This concept implies that only those transactions, which can be expressed in terms of money, are recorded in the accounts. Since money serves as the medium of exchange transactions expressed in money are recorded and the ruling currency of a country is the measuring unit for accounting. Transactions which do not involve money will not be recorded in the books of accounts. For example, working conditions in the workplace, strike by employees, the efficiency of the management, etc. will not be recorded in the books, as they cannot be expressed in terms of money.
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