Approaches to the Price Level Accounting Homework Help
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What is price level accounting?
In the economy there are a lot of goods and service being produced. The ultimate average of all such facilities brings us the price level. The purchasing power of money is deeply impacted by the price level. But there are many approaches taken by accountants in order to achieve that price level. Such methods are discussed in this article for Approaches to the Price Level Accounting homework Help.
Objectives of price level accounting
The following objective fundamentals compiled by our Approaches to the Price Level Accounting homework Help writers are worth noticing.
• It shows real profit and loss
• It indicates the financial position
• It signifies the real value of fixed assets
• Original capital employed can be seen
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Approaches to the Price Level Accounting
The following are the methods that are usually occupied in order to achieve price level accounting and are explained below in Approaches to the Price Level Accounting homework Help article.
1. Current purchasing power technique: the records are kept hidden and financial statement is presented on the basis of historical cost basis. The balance sheet and profit and loss account are further compromised with the help of general price index.
2. Conversion technique: as our Approaches to the Price Level Accounting homework Help article writers suggest, this technique needs the conversion of past figures to current purchasing power. The past figures are multiplied with the conversion factor to achieve it.
3. Replacement cost accounting: the company assets play a major role in this technique. The index used is not the general price index but directly related to the company’s particular assets.
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