Which statement about the unit of account function is correct?

Which statement about the unit of account function is correct?

• A. It provides a standard for pricing goods and keeping consistent accounts.
• B. It is the primary function of barter.
• C. It ensures money is always scarce.
• D. It is used only for measuring time.

Answer: (A)

The unit of account provides a common measure for valuing goods and recording transactions. It lets prices be quoted in a single currency unit and keeps financial records consistent, so you can compare costs, track expenses, and prepare ledgers without confusing different value scales. This is why the statement about providing a standard for pricing goods and keeping consistent accounts is correct. Barter operates without money, so it doesn’t rely on a standard unit to price items or maintain accounts. Money’s unit of account isn’t about ensuring scarcity, which relates to money supply and demand rather than how value is measured. And it isn’t about measuring time; timekeeping is unrelated to money’s unit of account function.

The unit of account provides a common measure for valuing goods and recording transactions. It lets prices be quoted in a single currency unit and keeps financial records consistent, so you can compare costs, track expenses, and prepare ledgers without confusing different value scales. This is why the statement about providing a standard for pricing goods and keeping consistent accounts is correct.

Barter operates without money, so it doesn’t rely on a standard unit to price items or maintain accounts. Money’s unit of account isn’t about ensuring scarcity, which relates to money supply and demand rather than how value is measured. And it isn’t about measuring time; timekeeping is unrelated to money’s unit of account function.