Monetary Item

Monetary Item
An asset or liability carrying a value in dollars that will not change in the future. These items have a fixed numerical value in dollars, and a dollar is always worth a dollar. The numbers don't change even though the purchasing power of a dollar does. The distinction is easy to see when contrasted against a non-monetary item like a factory. A factory will see its value - its price represented as a number of dollars - fluctuate over time like any other physical property. It may lose value over the years as it becomes outdated. Or it may gain value as a city grows up around it. So a company may record a factory as being worth $500,000 one year and $480,000 the next, whereas the same $100,000 in cash will be recorded as $100,000 every year.

Monetary items are simply cash, whether a debt owed by a company, a debt owed to it or a pile of cash in its account. For example, a company owes $40,000 to a supplier for goods delivered. That line item is recorded at $40,000 even though, when the company pays the bill three months later, the cost of those same goods has increased $3,000 because of inflation. Similarly, if the company holds $200,000 in cash, that $200,000 is considered a monetary item and is recorded as $200,000 even though, four years later, it may only buy $180,000 worth of goods compared to when it was first put into an account.


Investment dictionary. . 2012.

Игры ⚽ Поможем сделать НИР

Look at other dictionaries:

  • Monetary sovereignty — A state is generally considered monetarily sovereign to the extent that it retains the following legal rights[1][2]: The right of legal tender to choose which currencies are acceptable as legal tender for payment of taxes and other legal debts.… …   Wikipedia

  • monetary unit — / mʌnɪt(ə)ri ˌju:nɪt/ noun a main item of currency of a country (a dollar, pound, yen, etc.) …   Dictionary of banking and finance

  • ECONOMIC AFFAIRS — THE PRE MANDATE (LATE OTTOMAN) PERIOD Geography and Borders In September 1923 a new political entity was formally recognized by the international community. Palestine, or Ereẓ Israel as Jews have continued to refer to it for 2,000 years,… …   Encyclopedia of Judaism

  • Constant purchasing power accounting — Accountancy Key concepts Accountant · Accounting period · Bookkeeping · Cash and accrual basis · Cash flow management · Chart of accounts  …   Wikipedia

  • Historical cost — Accountancy Key concepts Accountant · Accounting period · Bookkeeping · Cash and accrual basis · Cash flow management · Chart of accounts  …   Wikipedia

  • Neutrality of money — is the idea that a change in the stock of money affects only nominal variables in the economy such as prices, wages and exchange rates, with no effect on real (inflation adjusted) variables, like employment, real GDP, and real consumption.[1]… …   Wikipedia

  • international payment and exchange — ▪ economics Introduction international exchange also called  foreign exchange        respectively, any payment made by one country to another and the market in which national currencies are bought and sold by those who require them for such… …   Universalium

  • Loot system — A Loot System refers to a system of distributing items ( loot ) amongst a group of players in a game, most commonly in a Massively Multiplayer Online Role Playing Games (MMORPG). The Premise of a Loot System Loot Systems exist solely because of… …   Wikipedia

  • money — moneyless, adj. /mun ee/, n., pl. moneys, monies, adj. n. 1. any circulating medium of exchange, including coins, paper money, and demand deposits. 2. See paper money. 3. gold, silver, or other metal in pieces of convenient form stamped by public …   Universalium

  • United States — a republic in the N Western Hemisphere comprising 48 conterminous states, the District of Columbia, and Alaska in North America, and Hawaii in the N Pacific. 267,954,767; conterminous United States, 3,022,387 sq. mi. (7,827,982 sq. km); with… …   Universalium

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”