ABSTRACT
Conventional accounting is almost universally recognized to be defective under inflationary conditions. There are at present in circulation in Australia “preliminary exposure drafts”, prepared by the Australian Accounting Standards Committee, entitled “A Method of ‘Accounting for Changes in the Purchasing Power of Money”, and “A Method of ‘Current Value Accounting”. Notwithstanding the express need of a method of accounting for inflation, neither of these statements is, or claims to be, a method of accounting for inflation. The first deals with ways of taking account of some of the effects of changes in the purchasing power of money, but disregards the effects of changes in the prices of particular assets. The second proposes the use of the replacement prices of assets in financial statements, but disregards the general effects of changes in the purchasing power of money. The object of the publication of the preliminary exposure drafts was to encourage discussion and comment, preparatory to the publication of an “accounting standard”.
