Constant Purchasing Power INFLATION ACCOUNTING
Geoffrey Whittington in his definitive work on inflation accounting in the beginning of the 1980´s, Inflation Accounting - An Introduction to the Debate, published in 1983, clearly indicated that with 1970-style Constant Purchasing Power inflation accounting ALL non-monetary accounts (with no distinction being made between variable and constant real value non-monetary item accounts) were updated by means of the CPI.
He stated that Constant Purchasing Power inflation accounting (CPP) was a method of inflation-adjusting all non-monetary accounts consistently by means of the Consumer Price Index which reflected changes in money’s purchasing power.
1970-style CPP inflation accounting tried to deal with the problem of inflation in the popularly understood sense, as a decrease in the real value of money. According to Whittington, CPP inflation accounting tried to solve this problem by inflation-adjusting all non-monetary items at the reporting date by means of the CPI.
Kindest regards,
Nicolaas Smith
Showing posts with label Constant Purchasing Power INFLATION ACCOUNTING. Show all posts
Showing posts with label Constant Purchasing Power INFLATION ACCOUNTING. Show all posts
Wednesday 12 August 2009
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