A top CPA firm member in San Francisco offers up accounting best practices for business:
Monetary Units or Measurement Scales defined: The monetary unit or measurement scale in financial accounting statements in current practice is nominal units of money, that is, unadjusted for changes in purchasing power of the money over time. An ideal measurement scale would be one that is stable over time. At low rates of change in general purchasing power (inflation or deflation), nominal units of money are relatively stable. Also, preparation and use of financial statements is simpler with nominal units that with other units of accounting measurement, such as disclosures of the effects of changing prices, artificial monetary unites, or units of a commodity such as gold.
However, according to some of the best CPA sources in the San Francisco area, as rates of change in general purchasing power increase, financial statements expressed in nominal units of money become progressively less useful and less comparable. The FASB expects that nominal units of money in Seattle businesses will continue to be used to measure items recognized in financial statements. However, a change from present circumstances might lead the Board to select another, more stable accounting or CPA measurement scale.
More accounting best practices explained by local San Francisco CPAs
Most aspects of current accounting practice are consistent with the recognition criteria and guidance in this Statement, but the criteria and guidance do not foreclose the possibility of future changes in practice. This FASB STatement is intended to provide guidance for orderly change in accounting standards when needed. When evidence indicates that information about an item that is more useful than information currently reported is available at a justifiable cost for the CPAs in charge, it should be included in financial statements of San Francisco businesses.
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