The Future of Financial Reporting .

Abstract The article presents a discussion on the future of financial reporting. The increased importance of accounting in public and private affairs has been accompanied by a critical examination of accounting itself. Considerable introspection has taken place within the accounting fraternity in recent years and some progress has been made in improving misunderstandings of the accounting mechanism and terminology. The chief limitation of accounting under present conditions is the assumption of a stable measuring unit, when, in fact, recorded dollars are of different vintages and represent different indexes of purchasing power. As a technique, accounting is primarily concerned with measurement. The dollar which is the only available measuring unit for business accounts is not a fixed unit. While in ordinary times its variations are small, serious difficulties present themselves under conditions of strong inflationary or deflationary pressures. The art of reporting a reasonably simple and realistic picture of business conditions and operations is, therefore, at stake.