A basic knowledge about reporting the effects of changing prices is useful for which of the following reasons?
A) Chances are that higher inflation rates will return to the United States, and readers of financial statements will once again be concerned about inflation- adjusted statements.
B) High inflation is still present in many countries, and most accounting reports in those countries report the effects of inflation.
C) The cumulative effect of even a 2% or 3% rate of inflation is substantial.
D) All of these answers are correct.

Question

Quizplus · Accepted Answer

Understanding the effects of changing prices is important because inflation can impact financial statements, and this knowledge is relevant both in countries with high inflation and in understanding the long-term effects of even low inflation rates.

A Basic Knowledge About Reporting the Effects of Changing Prices