When assessing general purpose financial statements, the financial analyst takes into consideration the fact that many important assets may not be included in the company's statement of financial position, such as human resource capital, intellectual property and social responsibility.This limitation is the result of applying which of the following characteristics of financial information?
A)Entity concept
B)Unit-of-measure assumption
C)Going-concern assumption
D)Periodic-reporting assumption

Question

Quizplus · Accepted Answer

The unit-of-measure assumption in accounting means that financial information is recorded in a consistent currency, which inherently limits the ability to include non-quantifiable assets like human resource capital, intellectual property, and social responsibility in financial statements. These assets cannot be easily quantified or measured in monetary terms, hence are not typically included in the statement of financial position.

When Assessing General Purpose Financial Statements, the Financial Analyst Takes