More from Ganesh Kotekar

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Disadvaniages, , 2. Too many calculations are involved for adjusting accounting to changing prices and making financial, statements complicated., , 3. Charging depreciation is a process of distribution of original cost of a fixed asset o, so charging anything in excess over the effective life of an asset is against the concept of, , 4. Adjusting accounts toe changing prices is a never ending process because prices g, , ver its effective life,, depreciation., , © on changing every, day., , 5. Price level accounting is not free from prejudice. Assets are recorded at current values which will be, according to the whims of an individual or group of individuals. It would enable people to dress up their, balance sheets according to their whims. On the other hand, actual cost recorded in historical accounting is, an objective evidence and is free from prejudice. oy tals, , L : of price level accounting by taking items at current values is not a, realistic mae aed Gest tn thet aban. it should not be distributed as dividend. Distribution of, unrealised profit as dividend amounts to erosion of capital which is not desirable., , 7. In times of deflation, lower depreciation will be charged because assets will have lower current value., It will increase profit which will lead to payment of excessive dividend. It is not desirable because it, amounts to payment of capital profit.