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Wednesday, 28 October 2009

Trust me, I´m an accountant

SA accountants unknowingly destroy the real value of your company’s equity since they assume there´s no inflation.

They unknowingly destroy the real value of Retained Profits with their stable measuring unit assumption, but, they also do not update the cost of inventories and cost of sales.

Consequently they overstate gross margins and instead of maintaining the full real value of equity, they pay some of it away in tax on inflation-adjustments, they fail to update trade debtors and they can also pay it away in dividends.

Kindest regards,

Nicolaas Smith