'While Proponents of Current Cost Accounting Are Convinced That It

question 15

Essay

'While proponents of current cost accounting are convinced that it provides more useful information than historic accounting,they do not agree on all issues.In general supporters can be divided into two camps; (1)those who believe in the financial capital concept,and (2)those who believe in the physical concept.' J.Godfrey,et el,'Accounting Theory',7^th Ed.p.205.
Explain the differences between the two concepts and the arguments for and against each viewpoint stating which you approach you believe is the most valid.

---

Definitions:

Operating Segments

Individual, identifiable components of an enterprise that engage in business activities, earn revenues, and incur expenses.

Reportable

Pertaining to information or data that must be disclosed or presented in official reports.

LIFO Cost-Flow

A method in inventory valuation where the most recently produced or acquired items are considered sold first, leading to older inventory costs being reported in the financial statements.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor costs.