Question 2 - 750 words Identify the weaknesses of historical cost accounting. Were any of the...

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Accounting

Question 2 - 750 words Identify the weaknesses of historicalcost accounting. Were any of the alternatives to historical cost(CPPA/CoCoA/CCA) successful? In your response you will need tooutline your criteria for success.

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Part 1 Historical Cost Accounting HCA is the conventional accounting where accounting records are maintained at original transaction price In economic environment the weaknesses of historical cost accounting are It does not consider price level changes Hence it failed to give true and fair view of financial affairs of organization It ignores inflation factor As a result Income statement reflects overstated unrealistic profit Monetary figures of assets in financial statements are outdated Assets reflect the cost at the time of acquisition It doesnt consider current market price It leads to a wrong inter period comparisons See Answer

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