What is the Monetary Unit Assumption? Definition and meaning

Monetary Unit Assumption

Definition: the Monetary Unit Assumption is an accounting principle which assumes money as a unit of measurement and that an entity should record only those business transactions or events in the financial statements which can be expressed or measured in monetary terms (unit of currency).
The monetary unit assumption consists of two main areas:
• Every business transaction or event can be expressed in monetary terms and the events that are non-quantifiable should be omitted.
• In the long run, the monetary unit should be stable and should not lose its purchasing power over time.

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