International Journal of Information Technology & Computer Science ( IJITCS )
Inflation is defined as a disproportionate and relatively sharp and sudden increase in the quantity of money relative to the amount of exchange business which always results in a decline in the general purchasing power. The inflation accounting which also known as price level accounting is a technique of accounting which takes care of the impact of price level changes on accounts. The important aim of this research is to see the difference between these two methods of preparing financial statements (historical & inflation) and assess the impact of inflation on financial statements of Steel Authority of India Ltd (SAIL) for the period of 5 fiscal years from 2006-07 to 2010-11. For this purpose the researcher has used CPP method for converting historical figures to inflation accounting, and the also the WPI (wholesale price index) that has been published by Reserve Bank of India. For analysis of data the researcher has used 6 ratios; NPR, OPR, ROI, ROE, CR and QR. The result exhibited that there are significant differences between historical cost accounting and inflation accounting, and there is a significant relationship between inflation accounting and performance measurement in financial statements of SAIL.
: Sail, inflation accounting, historical accounting, financial statement, changing prices.
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