Match the descriptions listed in letters a through e below with the proper assumption numbered from below.
-Stable dollar assumption
A) The economic life of an entity can be divided into time periods.
B) The financial statements should contain transactions related to only the business and not the individual owners.
C) Purchasing power of money is constant over time.
D) The dollar value attached to an item on a company's balance sheet is determined by the market in which the company operates.
E) Life of the entity is indefinite.

Question

Quizplus · Accepted Answer

The stable dollar assumption (also known as the monetary unit assumption) implies that the value of the currency (in this case, the dollar) remains stable over time, which aligns with choice C, stating that the purchasing power of money is constant over time.

Match the Descriptions Listed in Letters a Through E Below