According to the money concept, what is required for reporting financial data?

• A. Different currency units can be used for different transactions
• B. All financial data must be recorded in the same currency unit
• C. Historical cost must be valued in current currency
• D. Transactions must be converted into a common accounting basis

Answer: (B)

The money concept, also known as the monetary unit assumption, dictates that all financial transactions should be recorded in a consistent currency unit. This is crucial for ensuring the comparability and consistency of financial statements across periods and entities. By recording all financial data in the same currency unit, it becomes easier to aggregate, analyze, and present financial information.

Using a single currency unit allows stakeholders, such as investors and analysts, to assess financial health and performance more readily. It eliminates the confusion and complexity that would arise from mixing multiple currencies, which can distort financial results and complicate the financial reporting process.

Recording financial data in the same currency is foundational to financial reporting under Generally Accepted Accounting Principles (GAAP), enabling users to make informed decisions based on reliable and comparable financial information. In contrast, other options might suggest methods that either introduce inconsistencies or complicate the simple presentation of financial data, which is contrary to the principles of clear and effective financial communication.