unit of account

(noun)

a standard monetary unit of measurement of value/cost of goods, services, or assets.

Related Terms

Examples of unit of account in the following topics:

  • Functions of Money

    • The main functions of money are as a medium of exchange, a unit of account, and a store of value.
    • A unit of account is a standard numerical unit of measurement of the market value of goods, services, and other transactions.
    • Also known as a "measure" or "standard" of relative worth and deferred payment, a unit of account is a necessary prerequisite for the formulation of commercial agreements.
    • To function as a unit of account, whatever is being used as money must meet these characteristics:
    • Money, such as the U.S. dollar, functions as a medium of exchange, a unit of account, and a store of value.

  • The Definition of Money

    • Fiduciary money includes demand deposits (such as checking accounts) of banks.
    • It is a medium of exchange, a unit of account, and a store of value:
    • Unit of Account: It is a standard numerical unit of measurement of market value of goods, services, and other transactions.
    • To function as a unit of account, money must be divisible into smaller units without loss of value, fungible (one unit or piece must be perceived as equivalent to any other), and a specific weight or size to be verifiably countable.
    • Distinguish between the three main functions of money: a medium of exchange, a unit of account, and a store of value

  • Introduction to IFRS

    • They are occasionally called by the original name of International Accounting Standards (IAS).
    • Current Cost Accounting, under Physical Capital Maintenance at all levels of inflation and deflation under the Historical Cost paradigm as well as the Capital Maintenance in Units of Constant Purchasing Power paradigm
    • Financial capital maintenance in units of constant purchasing power, i.e., Constant Item Purchasing Power Accounting – CIPPA – in terms of a Daily Consumer Price Index or daily rate at all levels of inflation and deflation under the Capital Maintenance in Units of Constant Purchasing Power paradigm and Constant Purchasing Power Accounting – CPPA – during hyperinflation under the Historical Cost paradigm.
    • Stable measuring unit assumption: financial capital maintenance in nominal monetary units or traditional Historical cost accounting only under the traditional Historical Cost paradigm.
    • Units of constant purchasing power: capital maintenance in units of constant purchasing power at all levels of inflation and deflation in terms of a Daily Consumer Price Index or daily rate only under the Capital Maintenance in Units of Constant Purchasing Power paradigm.

  • Inventory Techniques

    • FIFO, LIFO, and average cost methods are accounting techniques used in managing inventory.
    • FIFO, LIFO, and average cost methods are accounting techniques used in managing inventory involving the amount of money a company has tied up within inventory of produced goods, raw materials, parts, components.
    • It takes the weighted average of all units available for sale during the accounting period and then uses that average cost to determine the value of COGS and ending inventory.
    • From them the Cost per Unit of Beginning Inventory can be calculated.
    • Army unit badges from a wall of military uniform items

  • Average Cost Method

    • Note that we compute weighted average cost per unit by dividing the cost of units available for sale, $690, by the total number of units available for sale, 80.
    • On 12/31/12, Furniture Palace has cost of goods available for sale (beginning inventory and purchases) of USD 5,000; 200 units available for sale; sales of 50 units; and an ending inventory of 150 units.
    • The per unit cost of inventory is USD 25 (5,000 / 200 units).
    • On 12/30/12, a purchase of 50 units is made for $250.
    • Under periodic inventory procedure, a company determines the average cost at the end of the accounting period by dividing the total units purchased plus those in beginning inventory into total cost of goods available for sale.

  • Selecting an Inventory Method

    • The units are alike, so the customer does not care which of the identical units the company ships.
    • Some accountants argue that this method provides the most precise matching of costs and revenues and is therefore the most theoretically sound method.
    • Purchase date: 10/5/12 -- 5 units at a cost of USD 6
    • On 12/31/12, Furniture Palace has cost of goods available for sale of USD 5,000; 200 units available for sale; sales of 50 units; and an ending inventory of 150 units.
    • The per unit cost of inventory is USD 25 (5,000 / 200 units).

  • Costing Methods Overview

    • The cost-accounting system is the result of decisions made by managers of an organization and the environment in which they make them .
    • On the other hand, a retailer's inventory consists of all finished products purchased from a wholesaler or manufacturer; the costs of their units are based on their acquisition cost rather than the costs associated with manufacturing units.
    • The specific identification method of inventory costing attaches the actual cost to an identifiable unit of product.
    • The weighted-average method of inventory costing is a means of costing ending inventory using a weighted-average unit cost.
    • Review the differences between the four cost accounting methods and demonstrate how to calculate the cost of goods sold

  • Managerial Accounting

    • Professional accountants look at the accounting records and reports of a business from two perspectives.
    • For example, when establishing an inventory cost for one or more units of product (each jersey or hat produced at Sportswear Company), U.S.
    • In contrast to financial accountancy information, management accounting information is usually confidential and used by management, instead of publicly reported; forward-looking, instead of historical; and pragmatically computed using extensive management information systems and internal controls, instead of complying with accounting standards.
    • This is because of the different emphasis: management accounting information is used within an organization, typically for decision making.
    • Managerial accounting is concerned with the provisions and use of accounting information to managers within organizations.

  • Introduction to GAAP

    • Generally Accepted Accounting Principles (GAAP) refer to the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards.
    • GAAP is not a single accounting rule, but rather an aggregate of many rules on how to account for various transactions. .
    • Monetary Unit Principle: assumes a stable currency is going to be the unit of record.
    • The FASB accepts the nominal value of the US Dollar as the monetary unit of record unadjusted for inflation.
    • This way of accounting is called accrual based accounting.

  • Flow of Inventory Costs

    • Accounting techniques are used to manage assumptions of cost flows related to inventory and stock repurchases.
    • Purchase date: 10/1/12 -- 10 units at a cost of USD 5
    • Purchase date: 10/5/12 -- 5 units at a cost of USD 6
    • On 12/30/12, a sale of Product X is made for 11 units
    • Purchase date: 10/5/12 -- 5 units at a cost of USD 6