Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter17: Other Services Provided By Audit Firms
Section: Chapter Questions
Problem 59RSCQ
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Question
Define fungibility, and explain why it matters in financial decision
making.
Expert Solution
Step 1
Fungibility: Something which is fungible is easily substitutable or exchangeable. Fungibility exists in many widely traded commodities. A tonne of copper or a barrel of oil may be substituted for another tonne of copper or another barrel of oil. Money is the clearest definition of a fungible entity. A dollar is a dollar, whether it was given to you, found on the street, or won by hard work. Whether that's a dollar bill in the pocket, 20 nickels in a jar of spare change, or even a number on the computer while checking the bank balance online, a dollar is a dollar. It's just worth the same. Money has the feature of being fungible.
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