Financial Reporting

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


The inflation that has occurred in many Western countries in recent years has been the primary motivating force which has encouraged accountants to consider the effects of changing prices on accounting measurement. However, inflation does not create fundamental accounting problems. As discussed in Chapter 3, inflation affects the stability of the unit of measurement normally used by accountants, but this instability can be removed by adjustments for changes in the purchasing power of money. None the less, the inflationary conditions have led to discussions of some fundamental accounting issues; in particular, the use of historical cost has been questioned. Some accountants have suggested that current values should replace historical costs in reports of financial position and performance.


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Notes and References

  1. 1.
    Institute of Chartered Accountants in England and Wales, ‘Accountants’ Liability to Third Parties — The Hedley Byrne Decision’, Recommendation V. 8 (issued December 1965 as Recommendation S. 8), para. 8b.Google Scholar
  2. 4.
    Institute of Chartered Accountants in England and Wales, Accounting for Stewardship in a Period of Inflation (London: Gee & Co. Ltd, 1968).Google Scholar
  3. 5.
    For a discussion of accounting information as a central device, see R. W. Scapens, ‘Information for Control’ in ‘An Evaluation of the Nature and Usefulness of the Economic Concept of Profit in Accounting’, unpublished Ph.D. thesis, University of Manchester, 1979.Google Scholar
  4. 7.
    T. A. Lee, Income and Value Determination: Theory and Practice (London: Nelson, 1973) ch. 6.Google Scholar
  5. 9.
    Institute of Chartered Accountants in England and Wales, ‘Accounting in Relation to Changes in the Purchasing Power of Money’, Recommendation N. 15 (May 1952) para. 1.Google Scholar
  6. 10.
    American Accounting Association, A Statement of Basic Accounting Theory (New York, 1966) p. 7.Google Scholar
  7. 11.
    M. Moonitz, ‘The Basic Postulates of Accounting’, Accounting Research Study No. 1 (New York: American Institute of Certified Public Accountants, 1961) ch. 2.Google Scholar
  8. 14.
    Accounting Standard Steering Committee, The Corporate Report (Institute of Chartered Accountants in England and Wales, 1975) p. 28.Google Scholar
  9. 15.
    Study Group on the Objectives of Financial Statements, Objectives of Financial Statements (known as the Trueblood Report), (American Institute of Certified Public Accountants, October 1973) p. 13.Google Scholar
  10. 17.
    This list was suggested by Bryan Carsberg, Anthony Hope and R. W. Scapens, ‘The Objectives of Published Accounting Reports’, Accounting and Business Research (Summer 1974) pp. 162–73.Google Scholar
  11. 20.
    Accounting Standards Committee, ‘Setting Accounting Standards’, in ‘A Consultative Document’ (1978), reprinted in Accounting Standards 1979 (Institute of Chartered Accountants in England and Wales, (1979) pp. 17–55.Google Scholar
  12. 21.
    Financial Accounting Standards Board, Scope and Implications of the Conceptual Framework Project (1976) pp. 5–6.Google Scholar
  13. 23.
    For instance, see J. C. Van Horne, Financial Management and Policy, 3rd edn (Englewood Cliffs, N.J.: Prentice-Hall, 1975) particularly pt I.Google Scholar

Copyright information

© Robert W. Scapens 1981

Authors and Affiliations

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

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