This article has a negative point of view about the current state of the accounting art. While taking this negative position, the writer must admit to having an overall point of view, which is on balance favorable to the current state of accounting practice favorable in the sense that progress has been made through the years and that useful data can be obtained from published financial information. Researchers generally know the basis of recording the information and researchers know that the certified public accountant has reduced the possibility of fraudulent information to a reasonable minimum. The state of the art could be much worse. Taking a more optimistic position, there have been changes in accounting thought and practice through the years and there will be additional changes in the future. Accounting is an inexact art, primarily concerned with measuring financial position and income. Accountants have to a great extent established confidence in the honesty of the information presented. The next step is to broaden the accountant's mandate and encourage him to exercise more leeway in deciding which economic events are susceptible of measurement. Even assuming that the present form of financial information is retained, supplementary statements prepared on different bases could be presented jointly with the conventional information.

This article focuses on the 1964 Concepts and Standards Research Study Committee of the American Accounting Association, which aimed to expand and to amend in part the statement on realization in "Accounting and Reporting Standards for Corporate Financial Statements--1957 Revision." That statement says the essential meaning of realization is that a change in an asset or liability has become sufficiently definite and objective to warrant recognition in the accounts. In considering this statement, and realization principles generally, attention will be focused on the problems of asset recognition and valuation and revenue recognition. The committee concurs with the statement of the 1957 Revision that primary emphasis should be given to the use by investors of published financial statements in making investment decisions and in exercising control over management. The committee recognizes the difficulty of developing a definition of realization that will have general applicability. Nevertheless, four of the committee members feel there is sufficient significance in the difference between realized and unrealized changes in value to justify making the distinction.