Abstract
‘Accounting records the past and the present; economics considers bygones to be bygones and treats with the present and the future.’ Many professionals in both fields have been content with this division of responsibility. Accountants, in particular, in determining the present values of future events have drawn in large part on the economists’ arsenal of analytical tools. More recently, in their efforts to fashion income concepts that take into account future prospects as opposed to past accomplishments, some accountants have conceded that the economic concept of income is the ideal.1 In this view, the accounting concept of income will differ from the economic concept only because practical difficulties of measurement prevent accountants from directly measuring the ideal itself.
The author is undebted to Philip W. Bell for perceptive comments on an earlier draft. (The views expressed are not necessarily shared by the Ford Foundation.)
1. The Inflation Accounting Committee, for example, has taken the following position (1975, p. 30): ‘In practice… other concepts (of profit) must be considered which approximate to (economic income) and which are capable of practical application.’ We shall argue that the Committee may be selling its own concept short. See also Lawson, 1975.
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© 1978 H.E Stenfert Kroese B.V.
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Edwards, E.O. (1978). The Primacy of Accounting Income in Decisions on Expansion: An Exercise in Arithmetic. In: van Dam, C. (eds) Trends in managerial and financial accounting. Nijenrode Studies in Business, vol 1. Springer, Boston, MA. https://doi.org/10.1007/978-1-4613-4062-1_3
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DOI: https://doi.org/10.1007/978-1-4613-4062-1_3
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