Regarding the monetary unit assumption,which of the following statements is correct?
A) This assumption requires that the items on the financial statements be measured at their current market value.
B) Accountants assume that the dollar's purchasing power is stable.
C) The value of a dollar does not change over time.
D) During periods of inflation, a dollar will purchase more.

Question

Quizplus · Accepted Answer

The monetary unit assumption assumes that the dollar's purchasing power is stable, meaning that its value does not change over time. This assumption allows accountants to measure and report financial transactions in a common unit of currency, which is the U.S. dollar in most cases. However, it does not require that items on financial statements be measured at their current market value, nor does it imply that a dollar will purchase more during periods of inflation.

Regarding the Monetary Unit Assumption,which of the Following Statements Is