This article examines the relationship between accounting, taxation, and inflation. It argues that inflation weakens the ability of traditional accounting rules to represent the real economic and financial situation of firms. As balance sheets and profits become distorted, taxation may be imposed on nominal rather than real gains. The article therefore calls for solutions that account for the effects of inflation on corporate accounts and taxable income within the broader debate on fiscal reform.
Belkahia et al. (Sat,) studied this question.