Money measurement

I am guessing that what you are really wanting is to know what the effect is of using historic cost accounting in times of rising prices. If so, then historic cost accounting understates the value of the assets on the Statement of financial position (because it is based on original cost, whereas the cost now would be higher). Also, it overstates the profit (because with historic cost accounting bases the depreciation on the original cost. If the depreciation were based on the current cost (which would be higher) then the depreciation expense would be bigger, so lower profit.)

Yess sir I made an error thanks for understanding

No problem :-)

dear sir, I guess when prices decreases then the effect is inverse i.e. assets is overstated and profits understated...please help me clear this confusion

That would be true (although less likely to be asked - in general prices tend to increase rather than decrease :-) )

Yess but I wanna confirm it because my exams are after tomorrow..hope Iwill pas..by he way sir do you have any specimen paper apart that of the acca and the open tuition because I have already practice both of them

Sorry but we do not have any more exams. Good luck on Monday :-)

Hmm its okiee.yaa hope I will pass :D

:-)

thanks you for your help sir I have passed my f3 exams :D

Thank you for letting know, and many congratulations :-)

Of course you help me loads thanks

:-)