Inflation Accounting: The Advantages and Disadvantages of being in Debt

Abstract

Many private individuals in the UK have been brought up by parents who have stressed the disadvantages of being in debt. As a result there are many people in this country who will not consider the purchase of goods unless they can be paid for in cash. Building society mortgage funds are sometimes looked upon as an honourable exception to the general rule, although even in this case there are still many individuals who cannot accept the idea of having a debt of several thousand pounds around their neck for say twenty‐five years. In conditions of inflation, however, these ideas should be questioned by both private individuals and business organisations, although there are many who will still prefer the comfort of a sizeable bank balance which will provide protection in the difficulties that may lie ahead.

Citation

Kirkman, P.R.A. (1975), "Inflation Accounting: The Advantages and Disadvantages of being in Debt", Managerial Finance, Vol. 1 No. 2, pp. 109-113. https://doi.org/10.1108/eb013349