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METHO!S OF MAINTAINING INFLATION ACCOUNTING

here are two methods of maintaining the boo%s of accounts as per ination accounting.

)urrent &urchasing &ower method $ )urrent )ost 0ccounting method both the

approaches leads to the di"erent ways of calculating current values of various

accounting variables. hese two methods are briey explained as under.

C"rrent #"rc$asin% #o&er 'C##(: Under ))& the historical costs are adusted with

the general price index. he items in the nancial statement are adusted $ revalued at

the general price level. *eneral &rice 'ndex is considered as very good measure for

conversion of historical costs into e!uivalent current purchasing power.

For e.g. an asset purchased at 5s. 67888 in 69:6;:< has to have = value in s value is

776. So the value of asset in

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