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Monday, 6 July 2009

Accountants´ unstable unit of account is the only unit of measure that is not an absolute value

Accountants regard all non-monetary items stated at Historical Cost, whether they are variable real value non-monetary HC items or constant real value non-monetary HC items to be fundamentally the same, namely, non-monetary items – or, items that are not monetary items - when they implement the very destructive stable measuring unit assumption as part of the traditional HCA model during non-hyperinflationary periods.

This is the result of money illusion. People make the mistake of thinking that money is stable in real value in a low inflationary environment. Inflation always destroys the real value of money over time. It is thus impossible for money to be stable in real value during inflation.

On the other hand, inflation has no effect on the real value of non-monetary items.
The unit of measure in accounting is the base money unit of the most relevant currency. Money is not stable in real value during inflation. This means that the unit of measure in accounting is not a stable unit of measure during inflation and deflation.

Accountants´ unstable monetary unit of measure or unstable monetary unit of account is the only generally accepted unit of measure that is not an absolute value. All other generally accepted units of measure are absolute values, e.g. metre, yard, litre, kilogram, pound, mile, kilometre, inch, centimetre, gallon, ounce, etc.