What is the accounting unit?

Account is a standardized unit that can be used to describe the value of something. The currencies are commonly used as an account unit because they have a number of properties that make them suitable for this purpose, but objects can also be used, such as pieces of gold or silver. Historically, people often used tradeable goods such as bags of flour or livestock as units from an account. The first is the ability to standardize and easily understand it. For example, with currencies you can give and widely understood as standard amounts; For example, $ 10 in the US (USD) is a standard amount that does not leave space for confusion, unlike the number like "10 cows", which could mean "10 large cows", "10 dairy cows" and so on.

Another important feature is stability. In this sense, the currencies are actually less than ideally, because they can be quite volatile, depending on the market. That is why some currencies are used more than others as other units. For example, a dollar and a European euro withFor example, binding states are widely considered to be reasonably stable. However, many nations prefer to use their own currency as a unit of account.

Finally, the account unit must also be something that can be easily divided into components of the same value without losing value. In an example of $ 10, if divided into 10 additions of one dollar, they still have the same value and are comparable. One dollar bill, in other words, is like any other dollar banknote and ten dollar bills are equivalent to $ 10. On the other hand, something like a work of art does not have this feature. Images cannot be cut into pieces of equivalent value. Likewise, a large diamond loses value when it is broken. On the other hand, durable goods as flnashing sharing the same value, whether one looks at 10 bags of flour or 100 bags of flour.

Account The unit is used in a wide range of transactions. LoanY, debt liabilities, credits and the cost of the goods sold are usually expressed in the account. In cases where people want to track their financial activities, they also use account units known as accounting. It is also possible to convert between different systems, as can be seen when a bank in Germany carries out a wire transfer to a bank in the United States where the party in Germany sends euro and the party in the United States receives dollars.