Unit of Account

The market worth of commodities, services, and other transactions is measured using a unit of account, which is a common numerical monetary unit. A unit of account, which is also referred to as a “measure” or “standard” of comparative worth and deferred payment, is a requirement before any business transactions involving debt may be created.

Money serves as a common unit of measurement and exchange. Thus, it serves as a foundation for price quotation and haggling. It is required for the creation of effective accounting systems.

Due to economic phenomena such as inflation, deflation, and others, the value of money in real life is highly variable. Due to its inconsistent ability to assess object value, money is not always seen as a good unit of account. To comprehend this issue, consider what would happen if Kilogram (Kg) measurement could not be maintained throughout time. The kilogram would then lose its usefulness as a unit for measuring weight.

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