inflation

[Charles Day]

On Fri, Aug 29, 2008 at 11:56 AM, Stuart McGraw <smcg4191 at frii.com> wrote:

> Tommy Trussell <mailto:tommy.trussell at gmail.com> wrote:
> > On 8/27/08, Stuart McGraw <smcg4191 at frii.com> wrote:
> > > It appears that the USA and other places in the
> > >  world may be headed for a period of high inflation.
> > >  So I would like to ask,
> > >
> > >  * Are there any special standard practices for
> > >   accounting during inflationary periods?
> > >
> > >  * Does Gnucash support these practices?
> >
> > I hope an actual accountant weighs in, but in my opinion accounting
> > practices would not apply here because 1USD=1USD, or 1EUR=1EUR that is
> > UNTIL you trade it for something else. The problems you run into is
> > how to handle an exchange for one item to another as efficiently as
> > possible. When you're talking stocks, you don't know the actual final
> > price until everything "settles" after the trade. If you're trying to
> > estimate your current net worth in terms of another unit, such as how
> > much your stocks are worth in US Dollars, Australian Dollars or Euros,
> > you're depending upon someone's estimate of what those items might
> > have traded for, 15 minutes, 24 hours, or 30 days ago.
>
> One area I expect inflation would affect is year-to-year financial
> comparisons.  If inflation is 15% per year, a revenue report might
> show a 15% increase when in fact there has been no real revenue
> growth.  If the purpose of financial reports is to provide an accurate
> picture of a business (or person's) financial condition (including
> changes) then clearly it is failing to do so in an inflationary
> environment. I was guessing that this is something accountants
> may have developed some standard ways of adjusting for.  But I
> can understand if this is beyond the scope of gnucash.
>

If all you want is to see inflation-adjusted reports, then it doesn't seem
like it would be too hard for some enterprising person to add an option to
specify a percentage and have each number in the report adjusted
accordingly, i.e. for 6% inflation divide each number by 1.06. Someone just
has to volunteer to do it. I suspect the main developers are too busy with
what they already have on their plate. (I know I am.)

If you don't want to try doing that work yourself, you could file an
enhancement request (a bug report) in Bugzilla so the idea doesn't get
lost.  http://bugzilla.gnome.org

-Charles