Limitations of historical cost accounting information under inflationary conditions : a theoretical study

Abstract EN

This study discusses the limitations of historical cost accounting information under inflationary conditions by introducing a review of the previous literature on inflation accounting.

The study concludes that historical-cost financial statements prepared underinflationary conditions could be misleading.

Furthermore, inflation impairs the financial accounting role a basis for decision-making.

Hence, the need for the adjustment of the historical cost financialstatements to reflect currenteconomic realities becomes inevitable.