Using Inflation Accounting Tools to Enhance the Qualitative Characteristics of Financial Statements

Abstract

This study aimed to highlight the role of inflation accounting tools in enhancing the qualitative characteristics of accounting information contained in financial statements. Under conditions of economic instability and continuous price increases, financial statements prepared according to the historical cost principle lose their ability to reflect the true financial reality of entities, negatively affecting their relevance and credibility. Accordingly, the study attempts to explain how alternatives to historical cost contribute to providing information that faithfully represents financial positions and increases users' ability to compare and make sound economic decisions. The study concluded that applying inflation accounting tools is an absolute necessity to protect the entity's real capital and improve the quality of financial reporting by meeting the fundamental and enhancing qualitative characteristics of information.