Question

Lawton corporations records business transactions in dollars and disregards changes in the value of a dollar over time. Which of the following accounting assumptions does this represent?

a. economic entity concept
b. monetary unit assumption
c. going concern assumption
d. cost principle

Answer 1

Lawton Corporation records business transactions in dollars and disregards changes in the value of a dollar over time. This represents the monetary unit assumption in accounting.

Step-by-step explanation:

The correct accounting assumption that Lawton Corporation represents is the monetary unit assumption. This assumption assumes that the monetary unit being used (in this case, the dollar) is stable and constant over time. By disregarding changes in the value of the dollar over time, Lawton Corporation is assuming that the dollar has the same purchasing power in every transaction.