The following points highlight the top two approaches to income measurement. The approaches are: 1. Transactions Approach to Income Measurement 2. Activities Approach to Income Measurement. Approach # 1. Transactions Approach to Income Measurement: The transactions approach in income measurement records changes in asset and liability valuations only as these are the result of transactions. The term transactions is used [...]
The following points highlight the top three concepts of capital maintenance in an enterprise. The concepts are: 1. Financial Capital Maintenance 2. General Purchasing Power Financial Capital Maintenance 3. Physical or Operating Capital Maintenance. Concept # 1. Financial Capital Maintenance: Financial or money capital maintenance pertains to the original cash invested by the shareholders in the business enterprise. According to this concept [...]
In this article we will discuss about the advantages and limitations of accounting income. Advantages of Accounting Income: (1) Accounting concept of income has the benefit of a sound, factual and objective transaction base. Accounting income has stood the test of time and therefore is used by the universal accounting community. (2) Another argument in favour of historical cost-based income [...]