CASE STUDY ON RE-ADJUSTMENTS DEPENDING ON PRICE MODIFICATION

• Main Author: Cozma Ighian Diana
• Format: Article
• Language: English
• Published: Vasile Goldis University Press 2011-01-01
• Series: Studia Universitatis Vasile Goldis Arad, Seria Stiinte Economice
• Subjects: accounting system; financial statements; prices; inflation.
• Online Access: http://www.uvvg.ro/studiaeconomia/images/2001/v2/13.%20CASE%20STUDY%20ON%20RE-ADJUSTMENTS%20DEPENDING%20ON%20PRICE%20MODIFICATION.pdf

Inflationary moments, characterized by significant price rises, have proved that accountingsystems based on historical costs provide a distorted image of the reality: the elements ofthe balance sheet are under-valuated, and the stock-related expenses and amortization in theprofit and loss account are also under-valuated. Under these circumstances, the result isover-valuated, and its distribution leads to allotments from the company’s capital. In thispaper we draw up a case study with regards to the methods used for adjusting pricemodification, clearly outlining, through a comparative analysis, the main differencesbetween the accounting system based on historical cost and inflation accounting.