ABSTRACT
In this chapter, the authors review the history of price level accounting in Britain, it will be useful for some readers to make a distinction between separate concepts of profit and capital of which two take account of price changes. Historical cost accounting (HCA) defines capital as the cash sum raised from the shareholders at the outset. Current purchasing power (CPP) accounting treats the capital invested by the shareholders as a pool of purchasing power units whose value must be maintained intact. So that, when the firm closes down, a sum of money possessing an equivalent purchasing power will remain available within the business to be returned to the shareholders. Current cost accounting (CCA) measures capital as the operating capacity of the assets purchased with funds invested in the company. Both CPP and CCA are referred to as systems of inflation accounting.
