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7 April, 2016 - 15:14

All accounting transactions are recorded in terms of monetary value. The use of a monetary value makes it easy to compare financial data, and it is the common factor of all business transactions. During changing price levels, monetary value does not always properly reflect true economic conditions. The use of current cost data or constant cost data can be used to adjust price levels to a current price range. This data is reported as supplementary information and the financial statements are prepared with the assumption of a stable dollar.