Taskin Akman

Publication Date


Document Type


First Advisor

McClary, Ray H.||Cheng, Philip C., 1925-

Degree Name

M.S. (Master of Science)

Legacy Department

Department of Accountancy


Financial statements


Conventional accounting operates on the assumption that the dollar is a constant unit of measurement and that can be used to describe financial and economic events without distorting their significance. A constant unit of measurement is essential for comparison of current period performance with performance of past periods. However, when the economy is unstable and the purchasing power of money is constantly changing, the data prepared by using a different size unit of measurement (in terms of purchasing power) for each period, cannot be comparable, and therefore, cannot be very meaningful. The distortion of the data in terms of comparability is directly related to the purchasing power of the measuring device (money). In order to improve the usefulness of data presented in financial statements, current cost concepts have been introduced. Two current cost concepts are discussed as alternatives to historical cost: (1) replacement cost and (2) general price-index-based cost. This study analyzed the literature on the current cost concepts and arguments against the conventional cost concept. In order to facilitate discussion, a case study is presented. In the case study, the financial statements of one company were revised in terms of each of the current cost approaches and the revised statements were compared to determine the most appropriate cost approach during a period of changing prices.


Includes bibliographical references.


v, 141 pages




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