Inflation Accounting Flashcards Preview

Joe's CPA Flashcards - FAR > Inflation Accounting > Flashcards

Flashcards in Inflation Accounting Deck (10):
1

Is accounting for the effects of changing prices mandatory?

No, it is optional.

2

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

A monetary item

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

3

What is a monetary item?

An asset or liability whose value is fixed in monetary terms

4

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

A non-monetary item

Examples include:
Inventories
Plant and Equipment
Intangibles
Marketable Securities

5

What is a non-monetary item?

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

6

Does inflation adversely or positively impact monetary assets?

Adversely, so a purchasing power LOSS

7

Does inflation adversely or positively impact monetary liabilities?

Positively, so a purchasing power GAIN

8

Does inflation adversely or positively impact non-monetary assets?

Positively, so a purchasing power GAIN

9

Does inflation adversely or positively impact non-monetary liabilities?

Adversely, so a purchasing power LOSS

10

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

Supplementary information to the financial statements