The accounting effects of applying inflation accounting to the financial statements

Abstract

The main objective of the research is to indicate the effects caused by the rise in general levels of prices on the financial statements of the economic units prepared on the basis of historical cost, as the economic unit ignored that rise, and to show the effects of that on the result of the work of the economic unit and its financial position, through the statement of the impact on the items The financial statements, as the research took into account the application of inflation accounting in periods of high price levels and the statement of the use of any correct accounting methods in the accounting measurement process, and in order for the economic unit to obtain measurement results closer to the truth, it must abandon the historical measurement method and use the accounting methods contained in the accounting standard International 29. The modified historical cost was used to modify the financial statements of the economic unit under study, Baghdad Soft Drinks Company, using the index numbers for the study period and published by the Iraqi Ministry of Planning - the Central Bureau of Statistics, and all non-monetary items included in the financial statements were modified based on what was stated in the standard International Accounting 29, and a business and financial position closer to the reality of the economic unit in question was reached. It can be relied upon in making decisions, as it reflects the reality of the economic unit in that period. As for the non-monetary list items, they are not modified, but the purchasing power gains and losses were calculated as a result. Keep it. The research recommended the necessity of applying the economic units to accounting for inflation by applying the International Accounting Standard 29 and taking into account the effects caused by inflation.