In this article we will discuss about the limitations of economic income. Economic income has several difficulties. In fact there is no agreement as to the meaning of "better offness" that occurs in specific time periods. Also, this term is not well defined in case of business enterprises. The greatest problem lies in measuring the net assets at the beginning [...]
In this article we will discuss about Accounting Standard (AS) 5 with regard to changes in accounting estimates and accounting policies. AS-5 on Changes in Accounting Estimates: 1. As a result of the uncertainties inherent in business activities many financial statement items cannot be measured with precision but can only be estimated. The estimation process involves judgements based on the [...]
The following points highlight the top three concepts of income. The concepts are: 1. Accounting Income 2. Economic Income 3. Capital Maintenance Income. Concept # 1. Accounting Income: Accounting income, often referred to as business income or conventional income is measured in accordance with generally accepted accounting principles. The profit and loss account or income statement determines the net income [...]