The right (or a set of rights), the obligation (or a set of obligations), or a set of rights and obligations of an entity, to which the conventions of measurement and recognition criteria and measurement are applied. A unit of account is determined in such a way as to ensure that the most useful information (to users of financial statements) are obtained in a cost-effective manner (at a reasonable cost that does not exceed the benefits).

A unit of account is used for both assets and liabilities in grouped or ungrouped transactions for financial reporting purposes. It is determined and used to provide relevant information about a respective item (asset, liability) and any related revenues, expenses, etc. For a transaction, it is determined for the purpose of providing faithful representation of the substance of the transaction and other events giving rise to an asset, liability and any related income or expenses.

In specific situations, an entity may need to select one unit of account for recognition and a different unit of account for measurement. For example, instruments may sometimes be recognized on an individual basis but measured as part of a portfolio (group) on an aggregated basis. For presentation and disclosure purposes, items may be aggregated as a group or separated into components.