Price Level Accounting: Problems and Solutions | Accounting

Here is a compilation of top three accounting problems on price level accounting with its relevant solutions.

Problem 1:  

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Mr. X purchased a machine in 2001 for Rs. 1, 00,000 when the general price index was 180. He sold the machine in 2003 for Rs. 1, 65,000 when the general index was 270.

Calculate the profit or loss on the sale of the machine, keeping aside the price level changes.

Problem 2:

A Company has the following transactions at the given dates and price indices for the first quarter of 2004:

Problem 3:

The information given below relates to monetary account of Ram and Company.

Compute the general price level of gain or loss:

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