| Author(s) | Yousuf Farag Jehmani |
| Affiliation | Assistant Professor, Accounting Department Yarmouk University, Jordan |
| Title | Maintaining Accounting Capital under Inflation: An Application on the Jordanian Joint-Stock Companies |
| Source | Journal of King Saud University. Administrative Sciences. Volume 11, No 2. (1999/1419) |
| Abstract | This paper aims to assess that the Jordanian companies maintain their capital under the Companies Act No. I, 1989 in time of moderate inflation rate. The Act requires the companies to retain 10% of their profit as a compulsory reserve. Moreover, the Act does not allow retention of more than 5% of distributable profit for more than one year. The balance sheets of twenty-nine industrial or service companies for 1993 were adjusted with Consumer Price Index (CPI). The results suggest that the companies do maintain their capital except the losing ones, those with low profit, and those having reached their compulsory reserve for the upper ceiling. The author recommends that companies should be compelled to retain 10% of their profit under all circumstances and that companies should be encouraged to prepare additional financial statements adjusted to reflect inflation rate. |
