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Re: Playing Accountant

From: Reinhard Müller
Subject: Re: Playing Accountant
Date: Mon, 19 Mar 2001 19:26:45 +0100

"Derek A. Neighbors" wrote:
> Here is the question.  We treat a dollar (or monetary unit) as a
> 'standard of measure'.  However this seems like a bad thing to do.
> Example.
> Today 1 meter = 1 meter or 1 foot = 1 foot.  In 60 years 1 meter = 1
> meter and 1 foot = 1 foot.
> However, I can not say 1 dollar = 1 dollar and 1 franc = 1 franc. In 60
> years 1 dollar = 1 dollar and 1 franc = 1 franc.
> This of course is due to the voliatle nature of purchasing power.
> Things like inflation and other factors adjust the relevance of the
> measurement. Now it appears that accountants accept the fact that there
> is a moving target and tend to deal with it off hand.

As I see it (and I'm no accountant, either), this is not a real problem
in accounting. In accounting, you usually compare amounts within a given
period of time (say turnover and expenses) or you compare some amounts
with the previous year. The relevance of the measurement of a given
currency *normally* doesnt' change that much within a year. And, if it
does, you probably have other problems to worry about ;-)

What is of course true is that the conversion between several currencies
has to change over time. But this is a completely usual feature in
financial software.

Reinhard Müller
BYTEWISE Software GmbH
A-6890 Lustenau, Enga 2

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