Understanding the financial and physical capital maintenance concepts helps ensure that a company's capital is preserved, facilitating accurate performance measurement over time.
Capital maintenance in units of constant purchasing power (CUPP) is an approach that maintains the financial capital's purchasing power by adjusting for changes in the general price level or inflation.
Current Purchasing Power Accounting is an accounting method that adjusts financial statements for changes in the general price level to maintain the purchasing power of shareholders' capital.
Current-Cost Accounting (CCA) is an accounting approach focusing on the operating capability of a business, ensuring assets are valued to prevent business loss upon their deprivation. This method highlights adjustments for inflation and operational capacity, differentiating holding gains from operating profits.
