Also known as a "measure" or "standard" of relative worth and deferred payment, a unit of account is a necessary prerequisite for the formulation of commercial agreements that involve debt.
Unit of account in economics allows a somewhat meaningful interpretation of prices, costs, and profits, so that an entity can monitor its own performance.
Many international transactions continue to be settled in this way, using a national value (most often expressed in the US dollar or euro) but with the actual settlement in something else.
In such circumstances, historical values registered in accountancy books become heterogeneous amounts measured in different units.
Units of account would often survive over 100 years despite the original coins changing composition and availability (e.g. the Castilian maravedi).
[6][7] At the onset of the Great Depression, John P. Norton restated the "Electric Dollars" standard alongside gold.
Unit of account is the main way of calculating a carrier or ship owner's liability in relation to carriage of goods contracts in which the Hague-Visby Rules apply.
In calculating the opportunity cost of a policy, a standard unit of account allows for the creation of a composite good.