inflation

[Stuart McGraw]

Charles Day wrote:
> 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.)

The need to adjust reports for inflation was just one
idea that occurred to me as an example of something
might need special treatment in an inflationary environment.
I am sure there are other things, but I am not an accountant
which is why I thought I would ask here.

> 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

OK, I will try an accumulate some additional ideas and
then submit a wishlist if they seem reasonable.