1. In the several statements of "Accounting Concepts and Standards Underlying Corporate Financial Statements" issued by committees of the American Accounting Association in 1936, 1941, and 1948, fundamental a concerning the functions of accounting in respect to revenue realization, costs, income, and capital were set forth. The objective in so doing was to present a coordinated statement of principles and suggested applications representing levels of accounting practice "departures from which should be viewed with concern." 2. Under the tax laws of the United States, Congress has enacted taxes on the net incomes of corporation. In the enactment of then laws and in their administration, by regulation or as a result of Court decisions, there have developed determinations of net income for financial statement purposes under generally accepted accounting principles. 3. These income between taxable income and accounting net income may be classified generally into two principal categories: deny or limit deductions as a matter of economic control or for purposes of raking revenue. (b) Differences of timing-those which the time of recognition of income or of deductions, usually resulting from legalistic interpretations of the tax statutes by Court or regulative decisions (thereby setting a precedent for subsequent administration). 4. The differences result largely from differences in purpose. The purpose of the revenue laws is to establish practical formulae for the collection of taxes (and at times to regulate the economy

In the 1948 revision of the regulation "Accounting Concepts and Standards Underlying Corporate Financial Statements," importance is attached to adequate presentation and disclosure in financial statements as a requisite for the formation of judgments. For some time the Committee on Concepts and Standards of the American Accounting Association has been considering the general subject of classifications in financial statements, with the objective of amplifying the specifications of this suggested standard. Standards of the Committee on Accounting Concepts and Standards represent the reasoned judgment of at least two-thirds of its members. They are not official pronouncements of the American Accounting Association or of its Executive Committee. They shall not necessarily be viewed as stating rules of current professional conduct or procedure. Rather, they state objectives in the development of accounting principles. Some are intended to have immediate applicability, while others forecast the general direction in which accounting may develop

An important element in the rehabilitation and sound growth of Japanese industry destroyed by the Pacific War, is the determination of the financial position and earning power of business enterprises. This prerequisite to the introduction of foreign capital, democratization of security investment, and equitable taxation, requires the improvement and unification of corporate accounting. Accounting in post-war Japan made an extraordinary development. More emphasis in corporate accounting has come to be laid on the income statement rather than on the balance sheet. The central problem of accounting in pre-war Japan, influenced by the regulations in the Commercial Code that aimed at the protection of creditors, was found in the study of the balance sheet, the items indicated and their valuation. In the development of profit and loss calculation, a noteworthy aspect is the abandonment of the all-inclusive principle, under which all costs and revenues were entered on one profit and loss statement

Accounting is passing through the familiar stages that other and older fields have traversed in their development. In accounting, as in other fields, practice preceded theory. Practice went forward on a hit-and-miss basis, but it went forward. There was no ready reference to a body of carefully reasoned principles, and there was no time, under the press of everyday business, to develop one. In the first stage of accounting development, about the only steadying factor was the high caliber of the men engaged in evolving practice. These men mostly relied on their common sense to solve problems. Modem accounting is now struggling through the second stage of its development, the stage of criticism. The criticism is mostly of practice including terminological disputes but criticism has also been made and received on such fragments of theory as we find in written form. The present stage has also changed course and shifted emphasis by reason of an ever tightening trend of governmental regulation, and ever increasing burden of taxation on concerns and individuals alike

Although double entry bookkeeping has existed for several centuries with very satisfactory results as a recording medium, it has been given a severe test during the last 60 to 70 years along with its companion known as accounting. The severity of the test has been caused by two main elements, (1) expansion of the field to include not only recording of transactions but also interpretation and reporting; and (2) rapid development of business itself with resulting complexity of transactions and adjustments. These two new phases presented themselves more or less gradually over the period mentioned, as influences began to appear in the form of the business corporation, income taxes, and government regulation. One of the main products of bookkeeping and accounting for the last century at least has been the calculation of profit or loss. During the last sixty years the textbooks on bookkeeping have kept pace with practical application of the subject, usually however, lagging by about ten years to permit new ideas to solidify and to allow for preparation of manuscript, printing, and proof reading