Accounting Measurement is the method of combining the monetary, time based or any other measurable unit with the economic or financial activity of accounting. In simple words, it is the unit of any measurable entity that is used for evaluation of accounting data.
Options of Measurement
When accounting measurement is done, it generally involves two choices:
- Choice of unit of measurement
- Choice of the attribute to be measured
For example for accounting we can consider money as the unit of measurement. Then the actual value of money that was used like in property, machinery, etc is considered for measurement. The choice of attributed can be described as the historical cost, present value, future cash flow, etc. These different attributes are used to measure accounting elements.
Units of Measurement
Accounting measures is usually described as a monetary value. But it can also be expressed in terms of many other alternating units like human resource that was used, a timeline of operation, labor hours, etc. Different accounting measurements give out a different evaluation strategy for accounting, thus a better view of the overall performance of a corporation can be obtained.
Some examples of accounting measurements include
- Payroll processing time
- Number of miscoded equipments
- Percentage of input error detected
- Number of user complaints, etc.
