Inflation only affects monetary items in
financial statements
The
statement The effects of inflation in financial
statements is a very common statement in accounting literature, international
accounting standard setting, central banking research and in accounting in
general.
Inflation
only affects the real value on monetary items and nothing else. Inflation has
no effect on the real value of non-monetary items. The stable measuring unit
assumption affects the real value of non-monetary items.
What is
intended with the statement The effects
of inflation in financial statements is to state: The effects of (1) inflation
on monetary items and (2) the stable measuring unit assumption on non-monetary
items in financial statements.
Nicolaas Smith
Copyright (c) 2005-2013 Nicolaas J Smith. All rights reserved. No reproduction without permission.
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