Inflation Accounting COPY Flashcards

1
Q

Is accounting for the effects of changing prices mandatory?

A

No, it is optional.

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2
Q

What is an asset or liability whose value is fixed in monetary terms?

A

A monetary item

Examples include:
Cash
Accounts and notes receivable
Prepaid expenses
Accounts, notes, and bonds payable
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3
Q

What is a monetary item?

A

An asset or liability whose value is fixed in monetary terms

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4
Q

What is an asset or liability that does not guarantee a fixed amount of money being received or paid?

A

A non-monetary item

Examples include:
Inventories
Plant and Equipment
Intangibles
Marketable Securities
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5
Q

What is a non-monetary item?

A

An asset or liability that does not guarantee a fixed amount of money being received or paid

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6
Q

Does inflation adversely or positively impact monetary assets?

A

Adversely, so a purchasing power LOSS

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7
Q

Does inflation adversely or positively impact monetary liabilities?

A

Positively, so a purchasing power GAIN

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8
Q

Does inflation adversely or positively impact non-monetary assets?

A

Positively, so a purchasing power GAIN

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9
Q

Does inflation adversely or positively impact non-monetary liabilities?

A

Adversely, so a purchasing power LOSS

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10
Q

Should a company wish to disclose information about the effects of changing prices, where would they report this information?

A

Supplementary information to the financial statements

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