The money measurement concept underlines the fact that in accounting, every recorded event or

transaction is measured in terms of money. Using this principle, a fact or a happening which cannot
be expressed in terms of money is not recorded in the accounting books. Thus, it is not acceptable to
[1]
record such non-quantifiable items as employee skill levels or the quality of customer service.

One of the basic principles in accounting is "The Measuring Unit principle: The unit of measure in
accounting shall be the base money unit of the most relevant currency.

This principle also assumes the unit of measure is stable; that is, changes in its general purchasing
power are not considered sufficiently important to require adjustments to the basic financial
[2]
statements."

The monetary unit principle states that you only record transactions that can be expressed in terms
of currency. Thus, you cannot record such non-quantifiable items as employee skill levels or the quality
of customer service.

The monetary unit principle also assumes that the value of the unit of currency in which you record
transactions remains stable over time. However, given the amount of persistent currency inflation in
most economies, this assumption is not correct - for example, a dollar invested to buy an asset 20 years
ago is worth considerably more than a dollar invested today, because the purchasing power of the dollar
has declined during the intervening years. The assumption fails completely if an entity records
transactions in the currency of a hyperinflationary economy.