possible for several different but reasonable

measurements and impairment losses to be

recognised by management Stevens: measurement is
assignment of numerals to objects
or events according to rules.
determine whether management
has made appropriate and
reasonable valuations Campbell: Measurement is the assignment of
numerals to represent properties of material
systems other than numbers

fair value approach should be

adopted as the working Involves linking formal
measurement principle Capital number system to
Measurement objects/events (semantic
issues for auditors rules).
Importance of
Measurement
Measurement in In accounting we
assigning a value to capital
accounting measure profit by

Profit calculating profit as the change in

linked to timely capital over the period
recognition

Interval scale Celcius temperature scale, standard cost accounting

Reliability
repeatable or
reproducible Numbering footbalers, classification of
Nominal scale
asset and liabilities into different classes

precision Reliability and accuracy Measurement Theory Scales

Ordinal scale Tallest to shortest person, investment
Proven consistency rank according to NPV

Ratio scale
Accuracy Measurement of length, use of dollar to
measure asset & liabilities
how close the measurement is to
the ‘true value’ of the attribute Permissible
measure - representation operations of
Types of measurement scales
Interval scale: addition
and subtraction
Derived measurement

depends on the measurement of two

or more other quantities Fiat measurement Nominal and ordinal scales: no
Fundamental arthmetic operations
measurement
Ratio scale: all
arithmetic operations
the measurement of profit Numerous ways in which scales can be
depends on the measurement of constructed
both income and expenses Numbers are assigned by reference to
natural laws

there are hundreds of

Length, number, volume ways to measure profit