The following are the generally accepted methods of accounting for price level changes:- 1. Current Purchasing Power Method (or) General Purchasing Power Method (CPP or GPP Method) 2. Current Cost Accounting Method (CCA Method). Method # 1 Current Purchasing Power Method (CPP): Institute of Chartered Accountants in England and Wales recommended that changes in the price level should be reflected [...]
FAS 33 (USA) and SSAP 16 (UK) differ in the following respects: 1. General Requirements: SSAP 16 calls for a complete profit and loss account and complete balance sheet on a current cost basis that may be presented as supplementary information or as the "main accounts with supplementary historical cost accounts" or as "the only accounts accompanied by adequate historical [...]
The following points highlight the three main types of price changes of goods and services. The types are: 1. General Price Changes 2. Specific Price Changes 3. Relative Price Changes. Type # 1. General Price Changes: A general price change is the result of a change in the value of the monetary unit during periods of inflation and deflation. Generally [...]