Sunday, 31 July 2016

An inconvenient accounting truth

No balance sheet has ever balanced in real value under Historical Cost Accounting and no balance sheet ever will while money, subject to inflation and deflation, is used as the unstable unit of measure.

Under IFRS and US GAAP authorised Capital Maintenance in Units of Constant Purchasing Power in terms of the Daily CPI the constant purchasing power of capital is automatically maintained constant in real value in all entities at all levels of inflation, hyperinflation and deflation - ceteris paribus.

Nicolaas Smith Copyright (c) 2005-2016 Nicolaas J Smith. All rights reserved. No reproduction without permission.