Changing from the nominal dollar scale to the purchasing power of the dollar scale for historical cost accounting is an example of invariant transformation.

Question

Quizplus · Accepted Answer

Invariant transformation is a type of accounting adjustment that preserves the economic significance of financial data over time. Changing from nominal dollars to the purchasing power of the dollar scale is an example of invariant transformation because it adjusts for inflation and maintains the real value of the money.

Changing from the Nominal Dollar Scale to the Purchasing Power