Calculate the cpp profit at the year end

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Question - At beginning of the year, Geoff set up a business with only cash of $2000, which was used to acquired inventory at beginning of year. The whole inventory was then sold on mid-year for $2420. On 30 November Geoff obtained a further $2300 of inventory on credit.

The index of the general price level is:

Date Index

1/1 100

30/6 110

30/11 115

30/12 120

Required -

(1) Calculate the profit for the year end, based on historical cost.

(2) What is the meaning of CPP (current purchasing power)?

(3) Calculate the CPP profit at the year end.

(4) Suppose you try to write a research paper based on this case with a stance of advocating alternative accounting systems against the historical cost method. Would this paper be positive accounting theory or normative accounting theory? Is this paper a critical theory?

Reference no: EM133180108

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