According to Money measurement concept, only those events or transactions, which can be measured in terms of money, are recorded in the books of accounts. For accounting, money is accepted as common measurement unit. Economic worth of assets and liabilities are stated in monetary terms instead of their physical quantity. Therefore, according to this concept, the transactions which cannot be measured in terms of money are not recorded in accounts.

For example, the amount brought by the owner as capital is recorded in terms of money. If we record the quantity of goods or assets, how to present the same becomes an issue. Similarly, for payment of any expenses, money is the only measurement unit. Therefore, for accounting, money measurement is an accepted accounting concept.

This concept has two important limitations :

1. According to this concept, value of money remains stable every year or the changes in the value of money is immaterial and hence of no significance, e.g., A motorcar purchased in 2014 for say ₹ 8,00,000 is shown in account of 2018 at the same value less depreciation, though its present value may be different in 2018.
2. The transactions and events affecting business, though important, are not recorded in the books of accounts of business if they cannot be measured in terms of money. For example, factory workers going on strike, disputes between Production Manager and Sales Manager, Changes in the sales policy, etc. have a material impact on business operations.