ABSTRACT
We have tried to show in this monograph how and why keeping track of current values, on assets and on liabilities, is absolutely essential for managers who must make decisions - on investment and choice of products and lines of activity, on choosing optimal prices and outputs for the different products fashioned and sold, on choosing which combination of inputs is most cost effective, and on choosing how to finance the various activities undertaken at different points in time. Decisions can, for the most part, be formulated in a way that Current Cost/Constant Dollar Accounting data can accommodate. Budgets can be formulated in these terms, and then as events occur, the expectations embodied in budgets can be evaluated. And in a way that certainly contributes at least indirectly to the decision-making process. The framework allows both managers and interested outsiders to judge the performance of managers in a way that is very much more meaningful than alternative frameworks that are common - specifically traditional Historical Cost Accounting, and Cash Flow Accounting which some would use to replace Historical Cost Accounting because of the tremendous arbitrary allocations inevitably exercised in the traditional framework. No allocations are required in the computation of Current Real Entity Income and its principal components, Current Operating Income and Realizable Real Cost Savings and Holding Gains. Nor is any required to move from Current Real Entity Income to Current Real Ownership Income by taking out of Entity Income all of the elements associated with creditor equities, viz. Current Interest Charges and any Realizable Holding Gain or Loss on Bonds Payable.
