ABSTRACT
This chapter discusses the effect of the rising price level on accounting. It deals firstly with what is meant by price level; secondly, the impact of a rising price level on industry, as measured by its accounts; and, thirdly, what measures industry should take towards the problem. The immediate effect of devaluation, so far as price levels are concerned, has not been particularly marked; resulting in a rise of possibly a point or two, but one has still to see the cumulative effect of the time lag in the increase in production costs. Devaluation is undoubtedly inflationary, and adds impetus to those factors which are tending to push prices to an even higher level. Taxation rose with the rise in the price level and appropriations to reserve are not allowable charges for tax purposes. The price of raw materials obviously rises with the general price level.
