![]() Communication: Once the economic events are identified, measured and recorded, the important information is generated and communicated to the management and other users.Recording is done in such a way that necessary financial information is summarised can be made available as and when required. Recording: Recording is process of recording identified and measured economic events in books of account in monetary terms in a chronological order.So, events like appointment of Managing Director, adoption of managerial policies are not shown in the books of accounts The events which cannot be measured in financial terms are not recorded in books of account. Measurement: Measurement means quantification of business transactions into financial terms by using monetary unit, viz.However, purchasing machinery and raw material are recorded in books of account because these is financial transaction involved in these events. So, appointing Managing Director and adopting managerial policy is not recorded in books of account as it does not have any direct financially measurable value. But only those events are recorded in books of account which involved some financial transactions. For example, Tata Motors purchases machinery, appoints Managing Director, purchases raw material, sell cars, adopts managerial policies etc, these all are events. It involves observing activities and selecting those events related to the organisation that are financial in nature. Identification: Identification means determining which transactions to record i.e., determining which events are to be recorded.Identification, Measurement, Recording and Communication ![]() Similarly, paying wages to employees is an internal event as employees are internal people which works for the organisation. Therefore, it is an example of economic event within organisation which is an internal event. When stores department supplies raw material to manufacturing department, it is delivering some value to manufacturing department. For example, Tata Motors establishes various departments for smooth working of organisation like stores department, manufacturing department, sales department etc. ![]()
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