Which statement identifies a disadvantage of the monetary assumption?

The statement that identifies a disadvantage of the monetary assumption is that the value of currencies and their names differ between countries. This highlights a critical limitation in the monetary assumption, which posits that economic transactions can be quantified and measured in monetary units, typically within a single currency.

When businesses and financial reporting assume a constant currency value, it can lead to complications, especially when dealing with international transactions. Exchange rates fluctuate over time due to economic factors, which can impact the financial results when comparing entities in different countries or when translating financial statements into a common currency. This variance can create misunderstandings regarding the actual performance or value of an asset, leading to potential misinterpretations in financial analysis.

In contrast, while the ability to represent all assets in dollar terms and the universality of the dollar as a medium of exchange suggest strengths of the monetary assumption, they do not address the inherent issues that arise from currency differences. Likewise, the notion that monetary value remains constant is factually incorrect, as inflation, market dynamics, and other factors affect currency values over time, making it an unreliable assumption for long-term financial planning or analysis.