Under current IFRS, inflation is ignored in accounting due to the
A) economic entity assumption.
B) going concern assumption.
C) monetary unit assumption.
D) periodicity assumption.

Question

Quizplus · Accepted Answer

The monetary unit assumption assumes that transactions can be measured and reported in a single, stable currency (such as the dollar or euro) without considering changes in its purchasing power due to inflation. As inflation is ignored, financial statements do not reflect the true economic reality of a company, particularly in high inflation environments. However, even if inflation is not explicitly accounted for, it can still indirectly impact financial reporting through factors such as changes in inventory and fixed asset values.

Under Current IFRS, Inflation Is Ignored in Accounting Due to the