What is Monetary unit, Economic entity and cost assumptions

Discussion about what is monetary unit, economic entity, and cost assumptions are given with example below:

Monetary unit assumptionMonetary unit assumption means that business transactions, events or accounting information are measured in terms of money.

Example: Mr. X invested in the Business Tk. 3,00,000.00. Here taka is the monetary unit. The monetary unit can be any term like the dollar ($), pound, Owen or etc. On the other hand, the efficient executive of a business entity switched to another business.  We have the substantial loss.

Economic entity Assumption: The economic entity assumption requires that the activities of the entity be kept separate and distinct from the activities of its owner and all other economic entity.

Example: Mr. Jashim, the owner of Jahim publishers, should keep his personal living costs separate from the expenses of the Jashim publishers.

Cost Principle: This principle states that assets  should be recorded at their cost.

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