Abstract The question, whether appreciation is a profit, is not merely the concern of bookkeepers. It is a fundamental point of both business and general economic theory. According as this question is answered there will have to be differences in concepts which prevail in business it regarding profit, capitalized value, price policy, balance sheet theory, tax law and financing. The business man cannot neglect the significance of this question as he is accustomed to do in matters of pure theory on the ground that is far removed from his concern. What he reports as profit to his stockholders depends upon his interpretation of this question. Wage policies are also affected and, of course, the computation of income taxes. Varying concepts of profit will have an even more distinct relation to economic theory. it is clear that the concepts of rent, interest, market value, price, income and capital must vary according to whether one considers as income only the real product produced within a certain period, or whether income is regarded as the surplus increment of value between two points of time. This is, therefore, a basic question of economic science and deserves careful attention.

Abstract This article shows that replacement costs furnish the best basis for producing serviceable financial statements to use for current managerial purposes or for use in planning mergers and reorganizations where the status of an enterprise as a whole is under consideration. The concept of profit sought is one which will enable the enterprise to function property as an economic unit in all economic situations. It must be that profit which at the moment of its calculation can actually be distributed-that profit which gives a value-picture in the profit and loss statement corresponding to the current economic situation. The profit of an undertaking can only consist of what is produced above the maintenance of business assets. A sharp line is drawn by this definition between assets and profits. Profits are also found in differences in time-values. While the entrepreneur can measure the degree of his success in buying and selling if the sale of his goods brings him returns which would permit him to buy or produce an additional quantity of the same goods at the moment of selling, the purpose of the speculator is differently orientated.