Money measurement

This topic has 13 replies, 2 voices, and was last updated 8 years ago by John Moffat.

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May 28, 2014 at 5:44 pm #171488
zwahira
- Topics: 26
- Replies: 44
dear sir, what happen to net profit and non current assets when there is a rise in prices?
May 30, 2014 at 9:38 am #171845
John Moffat
Keymaster
- Topics: 57
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I am guessing that what you are really wanting is to know what the effect is of using historic cost accounting in times of rising prices.

If so, then historic cost accounting understates the value of the assets on the Statement of financial position (because it is based on original cost, whereas the cost now would be higher).
Also, it overstates the profit (because with historic cost accounting bases the depreciation on the original cost. If the depreciation were based on the current cost (which would be higher) then the depreciation expense would be bigger, so lower profit.)
May 30, 2014 at 7:09 pm #171979
zwahira
- Topics: 26
- Replies: 44
Yess sir I made an error thanks for understanding
May 30, 2014 at 7:12 pm #171982
John Moffat
Keymaster
- Topics: 57
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No problem 🙂
May 31, 2014 at 4:23 pm #172140
zwahira
- Topics: 26
- Replies: 44
dear sir, I guess when prices decreases then the effect is inverse i.e. assets is overstated and profits understated…please help me clear this confusion
May 31, 2014 at 5:14 pm #172163
John Moffat
Keymaster
- Topics: 57
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That would be true (although less likely to be asked – in general prices tend to increase rather than decrease 🙂 )
May 31, 2014 at 5:36 pm #172171
zwahira
- Topics: 26
- Replies: 44
Yess but I wanna confirm it because my exams are after tomorrow..hope Iwill pas..by he way sir do you have any specimen paper apart that of the acca and the open tuition because I have already practice both of them
May 31, 2014 at 6:14 pm #172188
John Moffat
Keymaster
- Topics: 57
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Sorry but we do not have any more exams.

Good luck on Monday 🙂
May 31, 2014 at 7:10 pm #172196
zwahira
- Topics: 26
- Replies: 44
Hmm its okiee.yaa hope I will pass 😀
June 1, 2014 at 7:21 pm #172459
John Moffat
Keymaster
- Topics: 57
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🙂
June 2, 2014 at 4:02 pm #172734
zwahira
- Topics: 26
- Replies: 44
thanks you for your help sir I have passed my f3 exams 😀
June 2, 2014 at 4:28 pm #172755
John Moffat
Keymaster
- Topics: 57
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Thank you for letting know, and many congratulations 🙂
June 3, 2014 at 6:23 pm #173356
zwahira
- Topics: 26
- Replies: 44
Of course you help me loads thanks
June 3, 2014 at 11:23 pm #173486
John Moffat
Keymaster
- Topics: 57
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🙂
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