The Effects of Inflation on Preparation of Financial Statements of the Retail Sector in Zimbabwe: A Case Study of OK Zimbabwe Limited (2018–2019)

Abstract

The effects of inflation on preparation of financial statements of the retail sector in Zimbabwe over recent decades. Inflation is broadly defined by many scholars as a general increase in prices and fall in the purchasing value of money. Although a considerable inflation knowledge base exists in Zimbabwean SMEs, there have been no comprehensive studies on inflation in retail organizations which has been conducted. This study sought to determine what an inflationary economy is, identify the causes and types of inflation, determine the degree of impact to the preparation of financial statement in an inflationary economy, ascertain any operational benefits the retail sector likely to accrue by operating in an inflationary environment and recommend possible strategies to enhance proper preparation of financial statements. The literature on inflation showed that the following areas have not been explored: the meaning attached to an inflationary economy is by OK Zimbabwe is currently unknown, the impact of inflation to the preparation of financial statement in an inflationary economy, Zimbabwe is currently unknown, and operational benefits the retail sector likely to accrue by operating in an inflationary environment are currently unknown. Data for this study was collected through 234 questionnaires and six semi-structured and open-ended interviews with owner-managers of OK Zimbabwe. The systematic random sampling method was used to select respondents for quantitative research while the purposive method was used to select respondents for qualitative research. The SPSS version 20.0 was adopted to analyze quantitative data while the reduction method was adopted for qualitative data. Findings reveal that there is no standard meaning for inflationary economy is in Zimbabwe. OK Zimbabwe considers inflation as something which has an impact to the preparation of financial statement in an inflationary economy.