Good Case Study About Asset, Asset Price Volatility, And Medium Of Exchange

All assets even the perishables can be used to transfer current resources into the future. The owner of perishable asset needs to trade it with a nonperishable asset to store the value of his asset. Otherwise, anything whose value cannot be stored in present form or different form cannot be classified as an asset. For example, milk is a perishable asset, but it can be transformed into other forms that take long to be stale.
The adoption of money in place of barter trade enhanced the capability of storing the value of assets. The owner of perishable assets may not need to convert it like in the case of milk. The asset can be sold, and the owner keeps the money. He can use the money at a future date. However, the use of money as a store of value is affected by the rate of inflation. Thus, before making the decision to store the value of the asset in money one must consider the trends of inflation in the country.
It follows that anything that can be used as a medium of exchange can also be used as a store of value. For example, when salt was used as a medium of exchange people could exchange their commodities for salt. However, the acceptability of the commodity as a medium of exchange should not change abruptly i.e. there should be a smooth transition. For example, if a country wishes to change its currency the government informs people to change the old currency for the new currency. This makes sure that the medium of exchange remains as a store of value. The value of asset fluctuates, and the same happens to the money. This fluctuation of the value of money cannot affect its efficiency as a medium of exchange because it affects everyone in the economy.
The components of the statement are valid, and this means that the entire statement is valid. Money is accepted as a medium of exchange and a store of value. That is why it is classified as an asset in a firm's the balance sheet. All assets are expected to bring some returns in future.