The accounting convention of ________ ignores the effects of price level changes on the financial statements.
A)recognition
B)matching
C)cost benefit analysis
D)stable monetary unit

Question

Quizplus · Accepted Answer

The stable monetary unit accounting convention assumes a constant value for the monetary unit, ignoring the impact of price level changes on the financial statements. This means that any changes in the purchasing power of money due to inflation or deflation are not reflected in the accounting records. As a result, financial statements prepared under the stable monetary unit assumption may not provide a true and fair view of the economic reality of the business.

The Accounting Convention of ________ Ignores the Effects of Price