Moneytary Unit Assumption- This assumption states that infonnation in the financial statements must be expressed inmonetary units. The reason is that economic activity is expressed in moneytary unit,and thus,it makes sense to apply the same basis for accounting purposes.Moneytary units are relevant,universelly available and understandable.Using the neighborhood as an example, the intrinsic value of the best coffee server cannot be valued in the financialstatements,regardless of how many customefrequent the coffeehobse due to this individual.The inherent value Of thisperson cannot be quantified in the financial statements as an asset. Part The monetary unit assumption also states that a stable unit of currency is to be used as the unit of record.In the United Statements,the US Dollar is typically the currency of choice.Important to note, accounting ignoresbinflation or deflation and assumes that US Dollar remains reasonably stable.For instance,no adjustment are necessary when adding 1990 dollars to 2010 dollars, unless economic conditions change dramatically (e.g hyperinflation)
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