Question

Sprouse and Moonitz proposed that quantification is an element of economic environment that is relevant for accounting. In this regard, explain (approx. 250- 350 words why Sprouse and Moonitz say that quantification is relevant.

Answer 1

Quantification is relevant for Accounting:

Accounting is an important of the economy environment. The term economic environment is a wide term and it includes everything which makes impact on the growth and development of the economy of the country. So the importance and relation of the every element of the economic environment should be considered at the time of measuring the overall performance in every aspects.

In the instant case the term quantification which is basically used in economic environment has an important role in the Accounting. The accounting helps to measure the financial position of the business as well as the overall economy of the country. The terms quantification indicates the quantity. The quantity should be considered at the time of making any calculation. Let explain the same with example to make it clearer.

Suppose we need to calculate or determine the total amount of sales for the business. It is very important to compute the same otherwise the total income, profit etc. can’t be calculated. So to compute the total sales we need to know the quantity of sale otherwise it is not possible to calculate the exact amount of sales. Because the total sales are the product of the sale price per unit and the total number of units sales. The total number of sales which is required to compute the total sales is the part of quantification. Also to calculate the total purchase or other expenses and income it is important to know the quantity. Also there is a cost which is known as variable cost is also require the quantity, otherwise the total variable cost can’t be calculated.

So from the above discussion and the example it can be said that the term quantification which is an element of economic environment is very much relevant for accounting. So the statement of Sprouse and Moontiz is absolutely right.