Constant Purchasing Power Accounting I—Concepts
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The Accounting Standards Steering Committee (A.S.S.C.) set out in their provisional Statement of Standard Accounting Practice No. 7 a method of preparing financial statements which includes adjustments for changes in the value of money. Although the value of money may rise as well as fall, the current conditions of continuing inflation have led to the contents of the statement being referred to as ‘inflation accounting’. However, the proposed accounting adjustments are also applicable during a period when the value of money is rising and prices are generally falling. For this reason, the term ‘price-level accounting’ may more aptly describe the nature of the statement.
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