Abstract
Theory and practice of financial reporting are typically centered on the notion of income measurement. In this article, the authors adopt a fundamental measurement perspective. Income measurement is then argued to exist in a world of complete and perfect markets, but not necessarily otherwise. Hence, at a fundamental level the central feature of financial reporting cannot be income measurement. The writers then offer a reinterpretation of income reporting and accrual notions in terms of a "cost-effective" communication procedure.
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