Accounting and Reporting of Effects of  Changing Prices with Special Reference to  KSFCI, Bangalore

Shreelatha H R; Dr. V K Shruthi

Volume : II, Issue : X, October - 2013

Accounting and Reporting of Effects of Changing Prices with Special Reference to KSFCI, Bangalore

Shreelatha H R, Dr. V K Shruthi

Abstract :

The existing accounting practice of prep� financial statements are based on an important accounting assumption, namely, the monetary postulate, which states that the value of the monetary unit is stable and that fluctuations in it may be ignored in the preparation of accounts. So long as prices and costs remain stable, no accounting problem arises. But with the movement – upwards or downwards – in the price – level, the assumption of a stable monetary unit does not hold good. Consequently, a host of problems begin to creep into the accounts. This study shows although inflation effects are not recognized in nominal financial statements, they have significant economic consequences even during a period in which inflation is relatively low. This study also shows that how the inflation has affected the profitability of KSFCI, Bangalore.