Does this breach consistency or monetary unit?

[jag]

Frankston petrol station has decided that it is going to record the stock of petrol on hand in litres instead of in dollars in the Balance sheet. Referring to one accounting principle, explain why the stock of petrol should be recorded in dollars instead of litres.

If there are two or more accounting principles that are relevant, use the one most appropriate to this scenario.

[Flaming_Arrow]

Monetary Unit!

[costargh]

Moneray unit- all transactions must be recorded as a financial value. By doing it in litres means you aren't doing it in the currency of the country it was bought in which breaches monetary unit.

Consistancy isn't the most relevant because you simply cannot just record something in litres instead of dollars.

Because then someone could aruge that if you recorded everything as litres from the start of hte businesses life it would be ok, which is not true.

Accounting requires financial values.

[Fyrefly]

I concur.

As Flaming_Arrow has said, and Costa has explained: Monetary Unit is the most correct answer.

[nbalakers24]

i did the same sheet from Compak.

here is my answer:

The monetary unit principle states that all items must be recorded in their relevant unit of measurement i.e. Australian dollar. Litres is not a relevant currency and therefore Frankston petrol station should not value stock of petrol in litres.