The stable-monetary-unit assumption:
A) ensures that accounting records and statements are based on the most reliable data available.
B) holds that the entity will remain in operation for the foreseeable future.
C) maintains that each organization or section of an organization stands apart from other organizations and individuals.
D) enables accountants to ignore the effect of inflation in the accounting records.

Question

Quizplus · Accepted Answer

The stable-monetary-unit assumption enables accountants to ignore the effect of inflation in the accounting records. It assumes that the value of the currency used in financial statements remains stable over time, which may not be true in reality. However, it simplifies the preparation of financial statements and enables comparisons between different periods.

The Stable-Monetary-Unit Assumption