Constant Purchasing Power Accounting II—Application

  • Robert W. Scapens
Part of the Studies in Finance and Accounting book series


Measurement of financial transactions in terms of constant purchasing power does not necessarily imply a major change in established accounting principles. Historical cost can be retained as the basis of financial reporting. However, constant purchasing power adjustments may also be applied in accounting systems based on replacement or current costs. In the case of replacement- or current-cost accounting many monetary measures will initially be expressed in C.P.P. and further adjustments will be unnecessary. Nevertheless, as will be explained in Chapter 5 and illustrated in Chapter 6, there are aspects of those accounting systems where C.P.P. adjustments may be appropriate. Despite this general applicability of measurements in constant purchasing power, the terms ‘C.P.P. accounting’ in the United Kingdom and ‘G.P.L. accounting’ in the United States are generally applied to a method of historical-cost accounting in which costs are measured in C.P.P. terms. In this chapter such a method of accounting will be illustrated and discussed. Furthermore, the term ‘C.P.P. accounting’ will be used in this generally accepted manner. None the less, it should be remembered that in its widest interpretation C.P.P. accounting is not a simple alternative to current-cost accounting — the two methods are not mutually exclusive.


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Notes and Reference

  1. 1.
    See A. Hope, ‘The Availability of Data for Inflation Accounting’, Accountancy (October 1973) pp. 10–13.Google Scholar
  2. 4.
    R. C. Jones, ‘The Effect of Inflation on Capital and Profits, The Record of Nine Steel Companies’, Journal of Accountancy (January 1949).Google Scholar
  3. 5.
    P. Rosenfield, ‘Accounting for Inflation — A Field Test’, Journal of Accountancy (June 1969) pp. 45–50.Google Scholar
  4. 6.
    J. Pearcy, ‘Inflation and U.K. Published Accounts’, Journal UEC (October 1970) pp. 196–203.Google Scholar
  5. 7.
    R. S. Cutler and C. A. Westwick, ‘The Impact of Inflation Accounting on the Stock Exchange’, Accountancy (March 1973) pp. 15–24.Google Scholar

Copyright information

© Robert W. Scapens 1977

Authors and Affiliations

  • Robert W. Scapens
    • 1
  1. 1.University of ManchesterUK

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