The Supremacy of Inflation Accounting

Authors- Sarah Nabeel Polus, Mr. Avinash Bondu

Abstract- A considerable number of countries in the world are prone to inflation either with a big or small percentage. This has become constant as there are many external and internal factors behind the causation. Economies of the world try various techniques and implement various policies, to restrict inflation. However, the amount of inflation can be decreased but a complete eradication of inflation seemed to be impossible. Since the inflation results in the price and value changes on the assets or products, there has been a need raised to be considered in the accounting era for the reporting of financial statements. Standards by various international and national accounting bodies were issued to deal with the accounting for inflation. The present study analyzes the importance of inflation accounting by evaluating its role and impact of financial statements. Financial statements from a company of hyperinflationary economy (Celulosa Argentina company from Argentina) are considered and forecasted, variations will be determined using MS Excel and statistical techniques are implied and interpretations were drawn. The study concludes that the impact of inflation rate in high on various components of financial statements in hyper inflationary economy and it was less on that of a normal economy.

DOI: /10.61463/ijset.vol.12.issue3.174