Question

Explain the features of the current purchasing power (cpp) model

Answer 1

The introduction of current purchasing power (CPP) method is one of the greatest revolutions in the field of accounting. Under current purchasing power (CPP) method, any established and approved general price index is used to convert the values of various items in the balance sheet and profit and loss account. It involves the restatement of some or all of the items in the historical financial statement for changes in the general price level. For this purpose, approved price index is used to convert the various items of historical financial statement. This method helps to present financial statement in terms of units of equal purchasing power.