Abstract The article focuses on the concepts relating to proposals to account for the effects of price changes on capital maintenance. Many people, with both proprietary and entity viewpoints, still adhere to a money capital maintenance concept, and this could be because most external financial statements are still prepared in this way. Before leaving this general purchasing power capital maintenance concept, it should be mentioned that some people advocate the use of a general index to restate all accounting balances in accordance with movements in the general value of money itself. The entity viewpoint people, who would use one of these investment purchasing power indexes for capital maintenance purposes when accounting for the effects of price changes, would not calculate holding gains on long-term liability or preferred stock balances. Operating capacity based on the latest equipment, etc., needed to produce the same value of identical goods and services. It is believed that this paper has established that accounting for the effects of price changes is more directly concerned with capital maintenance than with periodic asset valuations and short-term profit determinations, and that, when accounting for price changes, the lifetime profit of each asset is affected by the particular capital maintenance concept employed, but not by the different asset valuation, depreciation, and revenue recognition methods that might be used.
R.S. GYNTHER (Thu,) studied this question.