Due to a labour strike in a factory, the production had to stop for a week The accountant estimated - Accountancy - Theory Base of Accounting

Question

Due to a labour strike in a factory, the production had to stop for
a week The
accountant estimated the loss of production and likely loss of
profit and recorded it
in the books of accounts Is the accountant correct? Give reason in
support of your
answer

Neha Chopra · Accepted Answer

Dear
Student

Due
to close of Production in the factory, there was not any loss to
the asset of the factory The Loss due to close of Production is a
loss of opportunity which cant be measured by the
company
And
we know that,
According
to the Money Measurement Concept, only those events are recorded in
the books of account to which money value can be attached, i e
which can be expressed in the monetary terms

Therefore
since this loss cant be measured due to its nature it shall not be
recorded And the accountant is wrong in his policy

Regards

Due to a labour strike in a factory, the production had to stop for a week. The accountant estimated the loss of production and likely loss of profit and recorded it in the books of accounts. Is the accountant correct? Give reason in support of your answer

Due to a labour strike in a factory, the production had to stop for a week. The
accountant estimated the loss of production and likely loss of profit and recorded it
in the books of accounts. Is the accountant correct? Give reason in support of your
answer