Share
VIDEOS 1 TO 50
Functions of money
Functions of money
Published: 2016/06/20
Channel: Khan Academy
What is UNIT OF ACCOUNT? What does UNIT OF ACCOUNT mean? UNIT OF ACCOUNT meaning & explanation
What is UNIT OF ACCOUNT? What does UNIT OF ACCOUNT mean? UNIT OF ACCOUNT meaning & explanation
Published: 2016/08/23
Channel: The Audiopedia
UNIT OF ACCOUNT
UNIT OF ACCOUNT
Published: 2014/12/08
Channel: SW AJ
Money #2 - Unit of Account
Money #2 - Unit of Account
Published: 2011/05/10
Channel: Ecolanguage
Money and Finance: Crash Course Economics #11
Money and Finance: Crash Course Economics #11
Published: 2015/10/14
Channel: CrashCourse
Unit of account
Unit of account
Published: 2016/01/29
Channel: WikiAudio
Four functions of money
Four functions of money
Published: 2016/05/15
Channel: EnhanceTuition
Unit of Account part 1
Unit of Account part 1
Published: 2010/10/06
Channel: davincij15
Accounting - Unit 1 - Part 1 - Definitions
Accounting - Unit 1 - Part 1 - Definitions
Published: 2012/01/09
Channel: Tony Bell
Bank Of Finland
Bank Of Finland's Grym Calls Bitcoin A Meaningless Unit Of Account
Published: 2018/07/12
Channel: Báo Nói 24H
What is Money
What is Money
Published: 2017/11/19
Channel: Econ Lessons
How Banks Create Money - Money (4/6) | Principles of Macroeconomics
How Banks Create Money - Money (4/6) | Principles of Macroeconomics
Published: 2016/04/28
Channel: Inspirare
Functions of money
Functions of money
Published: 2017/11/07
Channel: Economics Guider
Unit of Account part 2
Unit of Account part 2
Published: 2010/10/06
Channel: davincij15
The Money Market - Money (5/6) | Principles of Macroeconomics
The Money Market - Money (5/6) | Principles of Macroeconomics
Published: 2016/04/28
Channel: Inspirare
What Is A Unit Of Account
What Is A Unit Of Account
Published: 2017/12/12
Channel: Etta Hahne Tipz
Money as a unit of account
Money as a unit of account
Published: 2018/04/19
Channel: G Conomics
The Global Unit of Account is now shifting from the USD to the SDR  - ITM Trading
The Global Unit of Account is now shifting from the USD to the SDR - ITM Trading's Lynette Zang
Published: 2017/08/08
Channel: ITM Trading
Unilanx - Universal Unit of Account
Unilanx - Universal Unit of Account
Published: 2013/02/05
Channel: geraidinar
1 Money
1 Money
Published: 2015/12/20
Channel: MASTERCODEAV
The State Almost Always Creates The Unit Of Account
The State Almost Always Creates The Unit Of Account
Published: 2016/11/25
Channel: Deficit Owls
Marc Faber: Measuring With The Proper Unit of Account...Gold - McAlvany Commentary
Marc Faber: Measuring With The Proper Unit of Account...Gold - McAlvany Commentary
Published: 2011/09/21
Channel: McAlvany Financial
What exactly is cryptocurrency | Investopedia Academy
What exactly is cryptocurrency | Investopedia Academy
Published: 2018/04/19
Channel: Investopedia Academy
Silver as a unit of account and means of saving
Silver as a unit of account and means of saving
Published: 2011/02/15
Channel: Goldmoney
Money as Metaphysics:  Deleuze and Guattari on the Two Flows of Capital
Money as Metaphysics: Deleuze and Guattari on the Two Flows of Capital
Published: 2016/04/29
Channel: RowanCHSS
Money of account Meaning
Money of account Meaning
Published: 2015/05/01
Channel: ADictionary
Fiat money and the creation and use of money of account.
Fiat money and the creation and use of money of account.
Published: 2013/04/07
Channel: Darren Benson
The Gold Standard: How Does it Work? Do We Need It?
The Gold Standard: How Does it Work? Do We Need It?
Published: 2012/11/20
Channel: Bright Enlightenment
Money #3 - Store of Value
Money #3 - Store of Value
Published: 2011/06/18
Channel: Ecolanguage
Bitcoin Tutorial Episode 3: Functions of Currency
Bitcoin Tutorial Episode 3: Functions of Currency
Published: 2017/07/16
Channel: On1 Productions
Measures of Money Supply
Measures of Money Supply
Published: 2014/06/20
Channel: Chris Thomas
Quantity Theory of Money - Money (6/6) | Principles of Macroeconomics
Quantity Theory of Money - Money (6/6) | Principles of Macroeconomics
Published: 2016/04/28
Channel: Inspirare
12 Difference Between Money And Currency
12 Difference Between Money And Currency
Published: 2017/10/27
Channel: Patel Vidhu
Money and Banking - Lecture 02
Money and Banking - Lecture 02
Published: 2016/11/04
Channel: Krassimir Petrov
Functions of money
Functions of money
Published: 2015/07/08
Channel: T Prante
Functions of Money
Functions of Money
Published: 2015/01/07
Channel: Rosanna, Teaching Stuff
Accounting Unit 1   3
Accounting Unit 1 3
Published: 2014/02/17
Channel: amburgarseeya
Accounting Unit 2 - Lesson 3 Task
Accounting Unit 2 - Lesson 3 Task
Published: 2015/01/29
Channel: Amy Willingham
Money as a System-of-Control
Money as a System-of-Control
Published: 2017/10/10
Channel: Katie Carson
Jimmy Song: Bitcoin as Money - 29/01/18
Jimmy Song: Bitcoin as Money - 29/01/18
Published: 2018/03/29
Channel: Bitcoin Israel
What Is A Mark In Money
What Is A Mark In Money
Published: 2017/12/12
Channel: Etta Hahne Tipz
Crypto Fire- NEO Green Candles
Crypto Fire- NEO Green Candles
Published: 2018/04/09
Channel: Arcane Bear
What Is accounting unit - Define accounting unit Definition, Meaning | WhatIsDictionary.com
What Is accounting unit - Define accounting unit Definition, Meaning | WhatIsDictionary.com
Published: 2016/09/08
Channel: WhatIsDictionary One Stop Knowledge Hub
The Central Bank - Money (3/6) | Principles of Macroeconomics
The Central Bank - Money (3/6) | Principles of Macroeconomics
Published: 2016/04/28
Channel: Inspirare
Money Did Not Come From Barter - It Came From Blood Feuds
Money Did Not Come From Barter - It Came From Blood Feuds
Published: 2018/06/03
Channel: Deficit Owls
Monetary System/Economics Part 1: Currency vs Money
Monetary System/Economics Part 1: Currency vs Money
Published: 2016/11/10
Channel: PeacefulAnarchism
Retail is Fun | I Have Change
Retail is Fun | I Have Change
Published: 2018/03/07
Channel: Lukiepookie Entertainment
What is Money? - Money (1/6) | Principles of Macroeconomics
What is Money? - Money (1/6) | Principles of Macroeconomics
Published: 2016/04/28
Channel: Inspirare
Why Does Money Have A Value
Why Does Money Have A Value
Published: 2017/12/12
Channel: Etta Hahne Tipz
Monetary economics
Monetary economics
Published: 2015/12/13
Channel: Audiopedia
NEXT
GO TO RESULTS [51 .. 100]

WIKIPEDIA ARTICLE

From Wikipedia, the free encyclopedia
Jump to navigation Jump to search

A unit of account in economics is a nominal monetary unit of measure or currency used to represent the real value (or cost) of any economic item; i.e. goods, services, assets, liabilities, income, expenses. It is one of three well-known functions of money.[1] It lends meaning to profits, losses, liability, or assets.

A unit of account in financial accounting refers to the words that are used to describe the specific assets and liabilities that are reported in financial statements rather than the units used to measure them.[2] Unit of account and unit of measure are sometimes treated as synonyms in financial accounting and economics.[2]

Historically, prices were often given in a dominant currency used as a unit of account, but transactions actually settled by using a variety of coins that were available, and often goods, all converted into their value in the unit of account. Many international transactions continue to be settled in this way, using a national value (most often expressed in the US dollar or euro) but with the actual settlement in something else.

The unit of account in economics (unit of measure in accounting) suffers from the pitfall of not being stable in real value over time because money is generally not perfectly stable in real value during inflation and deflation. Inflation destroys the assumption that the real value of the unit of account is stable which is the basis of classic accountancy. In such circumstances, historical values registered in accountancy books become heterogeneous amounts measured in different units. The use of such data under traditional accounting methods without previous correction often leads to invalid results.[3]

All monetary units of measure, e.g., US dollar, euro, yen, yuan, ruble, peso, PKR, INR etc. (all fiat currency units) are assumed to be perfectly stable in real value during non-hyperinflationary conditions under traditional Historical Cost Accounting in terms of which the stable measuring unit assumption is applied. The Daily Consumer Price Index (Daily CPI) – or a monetized daily indexed unit of account – is generally used to index monetary values on a daily basis when it is required to maintain the purchasing power or real value of monetary values constant during inflation and deflation.

Uses[edit]

Economics[edit]

A monetary unit of account (unit of measurement) in economics allows meaningful interpretation of prices, costs, and profits, so that an entity can monitor its own performance and its shareholders can make sense of its past performance and have an idea of its future profitability. In modern economies, money in the form of currency usually serves the role of the unit of account (unit of measurement). The use of money, as a relatively stable unit of measure, improves the efficiency of market economies. However, money is generally never perfectly stable in real value which is the fundamental problem with traditional Historical Cost Accounting which is based on the stable measuring unit assumption.

Historic examples of units of measure include the livre tournois, used in France from 1302 to 1794 whether or not livre coins were minted. In the 14th century Naples used the grossi gigliati, and Bohemia used the Prague groschen.

At any one time there might be two or three units of account in one region based on the local base, silver and sometimes gold coins, and each often expressed in L.S.D units in ratio 240:12:1. The Florentine gold florin, the French franc and the electoral rheingulden all became pounds (240 denari) of account. Units of account would often survive over 100 years despite the original coins changing composition and availability (e.g. the Castilian maravedi).[4]

A modern unit of account is the European Currency Unit, used in the European Union from 1979 to 1998; its replacement in 1999, the euro, was also just a unit of account until the introduction of notes and coins in 2002.

Unit of account is the main way of calculating a carrier or ship owner’s liability in relation to carriage of goods contracts in which the Hague-Visby Rules apply.[citation needed]

In economics, a standard unit of account is used for statistical purposes to describe economic activity. Indexes such as GDP and the CPI are so broad in their scope that compiling them would be impossible without a standard unit of account. After being compiled, these figures are often used to guide governmental policy; especially monetary and fiscal policy.

In calculating the opportunity cost of a policy, a standard unit of account allows for the creation of a composite good. A composite good is a theoretical abstraction that represents an aggregation of all other opportunities that are not realized by the first good. It allows an economic decision's benefits to be weighed against the costs of all other possible goods in that society, without having to refer to any directly. Often, this is most easily accomplished with money.

Modern finance[edit]

The use of a unit of account in financial accounting, according to the American business model, allows investors to invest capital into those companies that provide the highest rate of return. The use of a unit of account in managerial accounting enables firms to choose between activities that yield the highest profit.

In accounting[edit]

The unit of account in financial accounting refers to the words that are used to describe the specific assets and liabilities that are reported in financial statements rather than the units used to measure them. That is, unit of account refers to the object of recognition or display whereas unit of measure refers to the tool for measuring it.[2]

Unit of measure and unit of account are sometimes treated as synonyms in financial accounting and economics. Unit of measure in financial accounting refers to the monetary unit to be used; that is, whether it should be nominal units of money as opposed to units that are adjusted for changes in purchasing power over time.[2]

See also[edit]

References[edit]

  1. ^ Mankiw, N. Gregory. Principles of Macroeconomics. Mason, OH: Southwestern Cengage Learning, 2008. 338-39. Print.
  2. ^ a b c d Financial Accounting Standards Research Initiative: The Unit of Account Issue
  3. ^ [1] The Taxation of Income from Business and Capital in Colombia: Fiscal Reform in the Developing World By Charles E. McLure, John Mutti, Victor Thuronyi, George R. Zodrow, Contributor Charles E. McLure, Published by Duke University Press, 1990, ISBN 0-8223-0925-4, ISBN 978-0-8223-0925-3, Page 259 : Inflation destroys the assumption that money is stable which is the basis of classic accountancy. In such circumstances, historical values registered in accountancy books become heterogeneous amounts measured in different units. The use of such data under traditional accounting methods without previous correction, makes no sense and leads to results that are void of meaning.(Massone, 1981a. p.6)
  4. ^ Peter Spuffords (1986). "Handbook of medieval exchange; Introduction". 

External links[edit]

  • Linguistic and Commodity Exchanges by Elmer G. Wiens. Examines the structural differences between barter and monetary commodity exchanges and oral and written linguistic exchanges.

Disclaimer

None of the audio/visual content is hosted on this site. All media is embedded from other sites such as GoogleVideo, Wikipedia, YouTube etc. Therefore, this site has no control over the copyright issues of the streaming media.

All issues concerning copyright violations should be aimed at the sites hosting the material. This site does not host any of the streaming media and the owner has not uploaded any of the material to the video hosting servers. Anyone can find the same content on Google Video or YouTube by themselves.

The owner of this site cannot know which documentaries are in public domain, which has been uploaded to e.g. YouTube by the owner and which has been uploaded without permission. The copyright owner must contact the source if he wants his material off the Internet completely.

Powered by YouTube
Wikipedia content is licensed under the GFDL and (CC) license