Inflation Accounting

Fiscal tables enable to report G/L transactions and interpret report results, and it is obligatory to prepare this table as to inform authorities properly.
Current G/L applications are generally performed over currency values valid on transaction date. Fiscal tables are arranged over accounts which are prepared with historical transaction values. However, it is clear that fiscal tables arranged according to historical data without considering price transactions can not carry out its functions in periods when price transactions are not stable. When price transactions are not considered, activity results may seem less or more than they are, and the relevant persons might be misinformed. For instance, in an economic environment where price transactions show variance, when a material which is purchased for 20 TL is sold for 30 TL after a certain period, historic values show that we earned 10 TL profit. However, if purchasing power rises up to 25 TL since purchasing power of money has changed when material is sold, the actual profit will not be 10 TL, it will be 5 TL (30-25). As the prices increase higher, purchasing power of money decreases.
Inflation accounting enables to reflect these changes to fiscal tables by considering price transaction changes; or in other words, it adjusts them. Inflation accounting is used to evaluate all transactions according to purchasing power valid on the date when local currency unit report is taken.
Various methods are developed in regard to adjustment transaction. These adjustments must be performed in accordance with the principles and rules of Capital Markets Board. CMB adopted "General Price Level Adjusted Accounting" method which removes the effects of price transaction changes upon fiscal tables by the help of general price indices.