The assumption that dollars will buy the same quantity of goods and services today as they would have five years ago is the:
A) revenue recognition principle.
B) time period assumption.
C) separate entity assumption.
D) unit-of-measure assumption.
E) continuity assumption.

Question

Quizplus · Accepted Answer

The unit-of-measure assumption assumes that financial transactions are recorded using a common unit of measurement, such as the dollar. This assumption assumes that the purchasing power of the dollar remains constant over time. Thus, the assumption that dollars will buy the same quantity of goods and services today as they would have five years ago is related to the unit-of-measure assumption.

The Assumption That Dollars Will Buy the Same Quantity of Goods