The effects of inflation on the operations of 10 northeastern colleges and universities and the effect of using current cost accounting are considered. The focus is on adjustments to assets in the plant fund by restating the surplus and deficit calculations of four state and six private institutions. The 10 institutions had plant assets with an original cost of $770 million. Current cost adjustment requires that each category of assets be restated to reflect replacement cost. Using Halstead's price indexes, all plant assets owned in 1961 or purchased during the 1961-1979 period were converted to replacement cost in 1979, with separate conversions for buildings, equipment, and library books. These conversions produced a "restated cost" of $1,521.3 million in 1979 dollars, an increase over the original cost of 97.6 percent. Using current cost, depreciation was $591.6 million, or almost twice as large. The effect of this large amount of depreciation on the flow of resources is addressed. For six independent colleges, deficits were estimated at about $370,000 per year, which would be serious when accumulated over a 10- to 20-year period. It is concluded that colleges need to identify a substantial, additional source of income in order to balance the total drain on institutional resources. (SW)