Comprehensive income is the total of an entity's operating profits and holding gains recorded during a particular accounting period, encompassing both realized and unrealized gains.
Current-Cost Accounting (CCA) is an accounting approach focusing on the operating capability of a business, ensuring assets are valued to prevent business loss upon their deprivation. This method highlights adjustments for inflation and operational capacity, differentiating holding gains from operating profits.
A form of accounting in which assets are measured at their current market price, recognizing all changes in value within the profit and loss account, differing from traditional historical-cost accounting by recording unrealized gains.
Historical Cost Accounting is a system of accounting based primarily on the original costs incurred in a transaction. Often employed to enhance objectivity, ease of application, and audit verification.
A comprehensive look at inflation accounting, its definition, examples, related terms, FAQs, online resources, and suggested books for further studies.
A modification of the historical-cost convention in which certain assets are included at revalued amounts rather than their original cost. This approach is permitted under specific regulations such as the Companies Act.
The monetary measurement convention in accounting demands that transactions be recognized in financial statements only if they can be measured in monetary terms. This convention assumes money as a stable unit of measurement and discourages the inclusion of non-monetary assets.
Objectivity in accounting aims to minimize subjective actions by preparers of accounts to ensure comparisons of financial statements across different companies are based on consistent principles.
An accounting system designed to account for changes in general price levels (inflation or deflation), making it an alternative to historical-cost accounting.
The general basis used in financial statements prepared under historical-cost accounting in which increases or decreases in the market values of assets and liabilities are not recognized as gains or losses until the assets are sold or the liabilities are paid.
A fall in the value of an asset that is expected to be temporary. Under historical-cost accounting, no adjustments are made for temporary diminutions unless they become permanent.
