Example of Money Measurement Concept
As money measurement concept records only quantitative transactions that affect business directly and ignores transactions that affect business indirectly. Laboratories, in 2014, proved the high lead content in Maggi which turned out to be harmful for human consumption. The downfall of Maggi caused goodwill and financial loss for the brand, but only financial loss was recorded in the books due to the money measurement concept. The controversy left a black dot on the goodwill of Nestle India, but this whole thing did not get recorded in the books of accounts because it can not be expressed in terms of money due to the money measurement concept. The comeback of Maggi included strengthened customer service helplines, more engaging social media handles, and other PR activities, resulting in increased expenses from Maggi’s end. The increased expenses get a place in the books of accounts, but the efforts made to increase the sales get left out.
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