Chapter 10 Price accounting

2 The learning goals of price accounting  1.Three stages of inflation accounting  2.the general price level accounting  3.current cost account  4.nominal currency  5.common dollar  6.financial capital  7.physical capital  8.financial capital maintenance  9.physical capital maintenance  10.accounting income  11.economic income  12.Holding assets income  13.monetary items  14.purchasing power gain or loss  15.price index

Section 1 The limitations of historical cost accounting  The limitations of historical cost accounting basic characteristics of historical cost accounting measurements in nominal monetary units measurement attributes of the historical cost revenue realization principle concern assumption matching concept  The limitations of historical cost accounting the assets cannot reflect its real value the profits cannot reflect the operating results the intelligibility of accounting information descends the enterprises’ reproduction capacity declines

Section 2 the general price level accounting  1.the feature of the general price level accounting  2.the accounting process of the general price level accounting  3.the feature of monetary items  4. the feature of nonmonetary items  5. the adjustment of project amount  6. the calculation of purchasing power gains or loss  7. the advantages of general price level accounting  8.the disadvantages of general price level accounting

Section 2 the general price level accounting  1.two different types of price changes the changes of general price level the changes of particular price level  2.processing methods of the general price level accounting divide monetary items and non-monetary items  monetary items: the monetary fund and debtor and creditor account of fixed amount ; the direct influence of price changes; Reflecting the purchasing power at end of the period no need to adjust.  monetary items: the monetary fund and debtor and creditor account of fixed amount ; the direct influence of price changes; reflecting the purchasing power at end of the period no need to adjust  non-monetary items: not directly affected by the influence of price changes; the historical cost reflects the past purchasing power; adjusted for the purchasing power at the end of the period.

Section 2 the general price level accounting  convert the nominal currency into common dollar  confirm the period of achieving a project  confirm the price index when the project is achieved  compile tabulation to demonstrate the current price index  calculate the coefficient  conversion  calculate the purchasing power of monetary items  recompile the accounting statement according to the general price level

7 Example  Company B bought a batch of goods which valued dollar from Company A on June 1. Company B paid off the money on January 2 next year. Price index accounts receivable purchasing power June January The purchasing power of company A's accounts receivable losses 5000 dollar. The purchasing power of company B's accounts payable gains 5000 dollar.

Section 3 Current Cost Accounting 1. the characteristics of the current cost accounting 2.current cost accounting procedures 3.loss of assets held view 4. current cost accounting income 5. maintain production profit and loss account 6. added to the depreciation account 7. advantages of current cost accounting 8. present the shortcomings of cost accounting

Section 3 Current Cost Accounting 1.current cost accounting basis of economic theory the cost of compensation theory monetary theory of capital preservation theory of physical capital preservation 2.with the current cost valuation of assets 3. holding gains and losses of properties and calculation unrealized; has been achieved

Section 3 Current Cost Accounting  4.Current Cost Accounting Example  5. Current Cost Accounting /Nominal currency accounting section the current cost and revenue ratio elimination of individual price changes adjustment is the measurement properties

Section 4 Comparison of various accounting models 1.Capital maintenance concept 2.Reliability 3.Intelligibility 4.Relevance and comparability 5.Information costs and benefits of 6.restraint 7.Economic impact

12 Section 4 Comparison of various accounting models Accounting modelcapital maintenance concept The historical cost/nominal moneybeginning of the number of capital in the name of the currency The historical cost/common dollarbeginning of the purchasing power of capital current cost /nominal moneymeasured in nominal currency beginning viability current cost /common dollarThe currency equivalent viability measured at the beginning