Abstract
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 change 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.
This is a preview of subscription content, log in via an institution to check access.
Preview
Unable to display preview. Download preview PDF.
Notes and Reference
Institute of Chartered Accountants in England and Wales, Accounting for Stewardship in a Period of Inflation ( London: Gee & Co. Ltd, 1968 ).
For a discussion of the value of information, see Roger Mace, Management Information and the Computer (London : Accountancy Age, 1974) ch. 7.
T. A. Lee, Income and Value Determination: Theory and Practice (London: Nelson, 1973) ch. 6.
R. S. Gynther, ‘Accounting Concepts and Behavioural Hypotheses’, Accounting Review (April 1967) pp. 274–90.
For the results of a survey of accountants’ attitudes towards the objectives of financial reporting, see Bryan Carsberg, Tony Hope and R. W. Scapens, ‘The Objectives of Published Accounting Reports’, Accounting and Business Research (Summer 1974) pp. 162–173.
Accounting Standard Steering Committee, The Corporate Report (Institute of Chartered Accountants in England and Wales, 1975).
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.
American Accounting Association, A Statement of Basic Accounting Theory (New York, 1966) p. 7.
M. Moonitz, ‘The Basic Postulates of Accounting’, Accounting Research Study No. 1 (New York: American Institute of Certified Public Accountants, 1961) ch. 2.
H. W. Bevis, ‘Riding Hard on Accounting Standards’, Accounting Review ( January 1961 ) p. 9.
D. E. Stone, ‘The Objectives of Financial Reporting in the Annual Report’, Accounting Review (April 1967) p. 333.
For instance, see J. C. Van Home, Financial Management and Policy 3rd edn (Englewood Cliffs, N.J.: Prentice-Hall, 1975) particularly pt i.
Author information
Authors and Affiliations
Copyright information
© 1977 Robert W. Scapens
About this chapter
Cite this chapter
Scapens, R.W. (1977). Financial Reporting. In: Accounting in an Inflationary Environment. Studies in Finance and Accounting. Palgrave, London. https://doi.org/10.1007/978-1-349-15777-8_7
Download citation
DOI: https://doi.org/10.1007/978-1-349-15777-8_7
Publisher Name: Palgrave, London
Print ISBN: 978-0-333-22626-1
Online ISBN: 978-1-349-15777-8
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)