Accounting as a Measurement Discipline- Valuation Principles, Accounting Estimates

Valuation Principles and Accounting Estimates

Objectives

After going through this lesson, you shall be able to understand the following concepts.

• Meaning of Measurement

• Objects or Events to be Measured

• Standard or Scale of Measurement

• Dimensions of Measurement Scale

• Accounting as Measurement Principle

• Valuation Principles

• Measurement and Valuation

• Accounting Estimates

Introduction - Meaning of Measurement

To begin with, let’s recall the definition of accounting. It states that accounting is a process of identifying, measuring and communicating the results to the users of accounting information. Now, from this statement, we can say that measurement does hold a significant role in accounting and that role is so important that the word ‘measure’ is being included in the definition of accounting. In this lesson, we will learn a lot about this term and its elements. This will help us in knowing how an accounting event or transaction is measured.

The principle of money measurement states that only those transactions that can be expressed in monetary terms are to be recorded in the books of accounts. Thus, to measure an event, the following elements of measurement are ta…