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 [...]
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 [...]
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 [...]