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Re: Playing Accountant

From: Rich Bodo
Subject: Re: Playing Accountant
Date: Mon, 19 Mar 2001 11:24:40 -0800 (PST)

You can say that 1 dollar = 1 dollar at any point in time, but you
can't say that one dollar today is one dollar tomorrow.  Likewise with
any monetary comparison.  At any given point, a value behaviour can be
observed in the market, but there can be no fixed value standard. 

A value standard is an interesting philosophical issue, but I believe
it to be practically insoluble.  In 100 years, when we live out our
lives in a computer system after our minds are scanned, we will
measure our lifetimes in MIPs or something, which may be just like
currency.  Of course, even then, something we cannot fathom will come
along and value will shift.

I guess that designing a system to make calculations relative to
currency X (where X is the U.S. dollar or whatever) is as good as
any.  If you wanted to know your inventory value, you can always
convert it from dollars to Euro's at a given instant.


Rich Bodo | address@hidden | 650-964-4678

On Mon, 19 Mar 2001, Derek A. Neighbors wrote:

> I have been playing accountant for a day or two and had a question for 
> our resident experts...
> It is given that money is the common factor in business transactions, 
> thus the only practical unit of measure that can produce financial data 
> that can be compared.  Now of course you have different monetary units 
> (currencies) etc, but you can convert to make comparisions.
> 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.
> So my question is should we allow a way to account for such factors in 
> our reporting etc??  Kind of a monetary unit restatement?  For what its 
> worth Im not an accountant, but would like to hear opinions.
> Derek  Neighbors
> GNU Enterprise
> address@hidden
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