Answer to Question #22188 in Finance for Angel

Question

Can someone describe the impact inflation has on the financial position of a health care institution addressing, assets, liabilities, expenses, revenues, owners’ equity, and the four major financial statements.

Answer 1

At first we should admit that answer will be different depending on which (nominal or real) data we use.
If we use nominal figures of our spendings, expenses, liabilities grow, sometimes
grow revenue, when demand for product won't decrease. Nominal owners’ equity
also increases. But real situation is different from this. Our real income,
revenue, assets decrease, cause value of money decrease. So inflation increases
nominal figures, but decreases real.