By recognizing the economic effects of inflation on the accounting financial statements, which accounting assumption is ignored?
A)Economic entity assumption
B)Going concern assumption
C)Stable dollar assumption
D)Fiscal period assumption

Question

Quizplus · Accepted Answer

The stable dollar assumption assumes that the purchasing power of money remains constant over time, which is not the case in inflationary environments. Therefore, by recognizing the economic effects of inflation, the stable dollar assumption is ignored. The economic entity assumption, going concern assumption, and fiscal period assumption still hold true.

By Recognizing the Economic Effects of Inflation on the Accounting