Postulates : Unit of measure

PP of monetary units is stable over time accounting is a process of measurement and communication of the activities of the firm that are measureable in monetary terms Accounting deals largely with judgments and estimates, not certainties. Paton in his book entitled Accounting Theory stated that there are 10 accounting postulates.

 Despite changes in PP, accounting has been unwilling to introduce accounts modifications to reflect changes in monetary standards. Values of accounting is expressed as fixed Paton and Littleton do not agree that accounting qualitative measurements should be designed to interpret and influence business conduct Argument: the term measured consideration is more appropriate than value to indicate subject matter in accounting.

 Argument on application of historical costs :

HC frequently results in income not being recognized during the period it incurred Overstates income during inflation

Changes in price creates 2 accounting problems:

Valuation Measurement unit

Highlights of Postulates
How to present FS How to account for changes in price Historical cost issue

Islamic Perspective
Money must not be sold against itself unless like-for-like, equal-for-equal and hand-to-hand Denominations may differ, upon mutual consent Money as unit-of-measure is accepted in Islam, under stable monetary system, questionable if otherwise because Islam puts large emphasize on honesty and justice in measure of all value Give measure and weigh with justice (6:152) Viewpoint on money during Inflation :
Questionable role of money- it fails to serve as just amount of monetary unit Unfair standards on deferred payments Untrustworthy store of value People behave unjustly towards other with or without intention Contradicts with Islamic verdict in Quran 4:29, Do not eat up your property among yourself for vanities

Sources from the internet

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