F2 - Changing Prices

Question 1

What are monetary items?

Answer 1

• Assets and liablities that are fixed in amount by contract or in terms of number of dollars.
• Examples include cash, accounts and notes receivable, accounts and notes payable.
• These items are already stated in constant dollars.

Question 2

What are nonmonetary items?

Answer 2

• Assets and liabilities that fluctuate in value with inflation/deflation.
• Examples are inventories, property, plant and equipment, and capital stock. These items need to be restated to constant dollars.