BUSINESS ADMINISTRATION
BUSINESS ENVIRONMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The cost principle
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The economic entity concept
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The monetary unit assumption
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The going concern assumption
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Detailed explanation-1: -Monetary unit assumption states that only transactions which can be measured in monetary terms are recorded in a company’s books of accounts. If a transaction cannot be expressed in dollar value, it should not be included in the company’s financial books. It is considered useless for financial accounting purposes.
Detailed explanation-2: -Definition of Monetary Unit Assumption The monetary unit assumption as it applies to a U.S. corporation is that the U.S.dollar (USD) is stable in the long run. That is, the USD does not lose its purchasing power. Note that this is the assumption.
Detailed explanation-3: -Answer and Explanation: The correct option is (a) monetary unit assumption. This assumption states that only those things which can be expressed in dollar values are included in accounting records.
Detailed explanation-4: -Answer and Explanation: The correct answer is 3. Monetary unit assumption. Monetary unit assumption uses the currency or money as the measuring stick or unit of measurement of every item that is reported on the financial statements.