FAR 27 - Inflation Accounting

Question 1

Monetary

Answer 1

A monetary item is an asset or liability whose value is FIXED IN MONEY terms

Examples: Cash, A/R, Prepaid Expenses, Loans, AP

Question 2

Non-Monetary

Answer 2

A non-monetary item is one that does not guarantee a fixed amount in money

Examples: Invetory, stocks, securites

Question 3

If Inflation: Monetary Asset

Answer 3

Purchasing power LOSS

Question 4

If Inflation: Monetary Liability

Answer 4

Purchasing power GAIN

Question 5

What is current cost accounting?

Answer 5

Current cost accounting reports assets on the BS at replacement cost.