Chambers as CoCoA

Raymond John Chambers is widely acknowledged as one of the leading academic contributors to the art of accounting. Chambers' research has promoted accounting as a university discipline. His objective was to improve the practice of accounting, exposing the unsystematic practices of conventional accounting and the unserviceability of its product. Strengthening the necessary relationship between practice, research and education was the dominant and consistent theme in Chambers' work since the 1940s. His research output was voluminous - numbering over 230 articles and a dozen major books and monographs. His seminal work, Accounting, Evaluation and Economic Behavior propounded a comprehensive theoretical foundation for a style of accounting, Continuously Contemporary Accounting (CoCoA), that would mitigate error, and eliminate many of the flaws and infelicities in accounting practice. In 1986 a five volume collection (a sixth volume was published in 2000) of his major articles was published by Garland Publishing Inc. Chambers was the founder of the accounting journal, Abacus, which is now in its fifth decade of continuous publication. It is the fourth oldest international academic accounting journal.

CoCoA was first presented at length in Accounting, Evaluation and Economic Behavior in 1966. It is consistent with a large body of economics literature on money, prices, price levels and price structures, the tenets of measurement theory and the common sense rules of financial calculation. Accordingly, a business entity's wealth is measured as the amount of unencumbered current general purchasing power it commands; income for a period is the increase in its wealth; and loss, the decrease. Wealth is calculated as the aggregate of the face values of its cash and other liquid assets plus the cash equivalent of its physical assets, less the contractual amount of its liabilities. The cash equivalent of a physical asset is taken to be best indicated by its current selling price. In many respects CoCoA has similarities to historical cost accounting: the double entry principle is consistently applied; cash and credit transactions are accounted for in exactly the same way and the matching principle is used systematically. Income for a period under CoCoA has three components: net revenues, which comprise all receipts less all payments made in the course of business; second, the price variation adjustment, which is the net amount of all changes in the cash equivalents of physical assets; and third, the capital maintenance adjustment, which is the amount necessary to restate wealth at the period's commencement in terms of the general purchasing power of the currency at the end of the period. It is a scale adjustment to account for the price variation in the general purchasing power dimension of the monetary unit of measure.

Concern with explicating his ideas to wary audiences resulted in Chambers employing novel devices to explain and instruct. One of particular and enduring significance was recourse in the 1960s to mathematical notation as a means of explaining how his system of accounting would simultaneously accommodate changes in specific prices and changes in the general level of prices. Chambers' notation has become an integral part of many professional, governmental and educational analyses and reports into what has been coined "accounting for inflation".

This is an edited version of material prepared in a piece in 1992 by Frank Clarke and Graeme Dean for inclusion under the title 'Chambers, Raymond John (1917 - )', in M. Chatfield and R. Vangermeesch's (eds) The History of Accounting: An Encyclopedia, which was published by Garland Publishing in 1995.


* Note: all reference links are to University of Sydney Library databases.