1.10 Monetary Unit

VCE Accounting Unit 3. Video of this presentation can be found on my YouTube channel here https://www.youtube.com/channel/UCf5jyuJoYwie8tWfvjEc0zg.

1. 1.10 monetary unit principle

2. Video of this presentation at… YouTube Channel for VCE Accounting

3. The Rules of Accounting Relevance Reliability Comparability Understandability Entity Historical cost Going concern Reporting period Monetary unit Conservatism Consistency Qualitative Characteristics Accounting Principles 1.10 monetary unit principle

4. Monetary Unit Principle This means that: All financial transactions must be measured in monetary terms and not anything else (e.g. bartering) The unit of measurement is the currency of the country in which the report is being prepared , e.g. $ in Australia, £ in the UK, ¥ in Japan 1.10 monetary unit principle Definition: All transactions should be reported in a common unit of measurement (in Australia, this is Australian Dollars )

5. Balance Sheets for three companies… Apple Balance Sheet Current Assets 57,653 Current Liabilities 38,542 Non Current Assets 118,411 Non- Current Liabilities 19,312 Owner’s Equity 118,210 176,064 176,064 Virgin Media Balance Sheet Current Assets 844 Current Liabilities 1,278 Non Current Assets 7,096 Non- Current Liabilities 6,022 Owner’s Equity 640 7,940 7,940 USA company Qantas Balance Sheet Current Assets 5,641 Current Liabilities 6,235 Non Current Assets 15,217 Non- Current Liabilities 8,472 Owner’s Equity 6,151 20,858 20,858 UK company AUS company Reported in US Dollars Reported in UK Pounds Reported in AUS Dollars 1.10 monetary unit principle

6. Monetary Unit Principle Example: Qantas made $10m of airfare sales to US customers this period – charged in US Dollars . But how would Qantas report them in their financial reports? AUS dollars 1.10 monetary unit principle

7. TASK In-class Homework SQ28 X SQ29 X