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. © Michael Allison. Author’s permission required for external use.
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. © Michael Allison. Author’s permission required for external use.
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. © Michael Allison. Author’s permission required for external use.
 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. © Michael Allison. Author’s permission required for external use.
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. © Michael Allison. Author’s permission required for external use.
TASK
In-class Homework
SQ28 X
SQ29 X