👉 Accounting fluid refers to the process of adjusting the recorded financial transactions to reflect their true economic value, accounting for changes in market conditions, inflation, or other factors that might impact the value of assets or liabilities over time. This adjustment ensures that financial statements provide a more accurate and realistic picture of a company's financial position and performance. For example, when the market value of inventory increases due to inflation, accounting fluid would adjust the inventory valuation to reflect this higher value, thereby providing a more accurate representation of the company's financial health. This process is crucial for maintaining the relevance and reliability of financial reporting, enabling stakeholders to make informed decisions.