A dollar adjusted for inflation. If an asset such as land was purchased for $10,000 many years ago when the consumer price index (CPI) was 100 and today the CPI is 400, today’s constant-dollar amount would be $40,000. However, generally accepted accounting principles (specifically the monetary unit assumption) assumes that the CPI is unchanging. Therefore the land will be reported at its original, unadjusted amount of $10,000.
Featured Review
"I found myself in need of reviewing many topics in accounting and accounting principles used in the US. I looked into many accounting courses, but I found AccountingCoach to be the best and most reliable accounting resource ever! I like it because it is very well organized and user friendly. I was able to easily find the topics I needed and understand perfectly what was required, as the material provides thorough and detailed explanations with examples and practice quizzes to test your knowledge at the end of each topic. I love that it covers all the information needed in accounting and finance, with hints and reasonable financial analysis when it comes to financial ratio studies that would interest anyone working in those industries. I am really grateful to have AccountingCoach! Thank you, professional gentlemen, for creating such a great and trustworthy source of accounting information. It has made my life easier! I highly recommend it to everyone in the field." - Roula K.
Join PRO or PRO Plus and Get Lifetime Access to Our Premium Materials
Read all 2,645 reviewsWe now offer 10 Certificates of Achievement for Introductory Accounting and Bookkeeping: