Beyond the Rules: The Conundrum of Price Changes in Financial Accounting

• In Event: Dialogue Session 1
  In Dialogue Session: Dialog Session I

Abstract

Fluctuating prices are an accounting problem that has defied resolution through consistent and logical rules. This paper highlights three trends which suggest a need to go beyond presentation of standard setters’ rules in intermediate financial accounting classes to look at the underlying distributive justice impacts on a broad array of accounting issues. The paper 1) presents consumer price index data which supports the claim that price changes are still a significant issue in many countries, 2) reviews the problems the profession has encountered in its prior attempts to deal with inflation, price level fluctuations, and fair value issues, 3) discusses the approach to price changes taken in major U.S. undergraduate financial accounting textbooks, 4) considers the benefits and obstacles to widespread inclusion of the topic in intermediate accounting classes, and 5) presents a separate teaching module introducing students to the impact of changing prices.

Author

• Louella J Moore, Washburn University