The article focuses on the myths associated with accountancy. The myths associated with accountancy prevents one from seeing the reality which in turn produces gaps between perception and fact. The study presented in this article considers some of these divergencies. The first is what the author describes as the "gap in generally accepted accounting principles (GAAP)," whereby generally accepted accounting principles, fails to serve as an effective medium for common understanding. The linguistic gap precludes the comprehension of the message being communicated to those who require this understanding as an incident to their decision making in a great many areas of the economic existence. The second such contrast between perception and fact can be discerned in the presuppositions on the part of even the sophisticated members of the financial community regarding the nature and extent of the auditor's involvement in the determination of the statements of financial condition and operations.

The article focuses on the adequacy of accounting principles. Circumstances for which present-day accounting principles or standards were designed have undergone a major metamorphosis without a corresponding development in accounting concepts and practices. Even the accountancy profession has not recognized the fact that the economy of the U.S. has experienced a major transformation during the past half of a century. It has evolved into an American Economic Republic with the resultant delegation of responsibility and power from the shareholders to the professional management group. This shift has produced a dichotomy of interests and objectives. The author states that the present-day organizational structure and theoretical foundation and research apparatus of accounting profession are not fulfilling accountant's role of discerning and communicating economic truths to those who are vitally concerned with such truths. Failure to bring about a revolution in accounting would lead governmental agency to assume the very functions for which accountants are now especially responsible.

In the article, the author presents a critical appreciation of the article "A technique to Adjust Financial Statement Data for Changing Price Levels," by Richard A. Ridilla, published in the October 1960 issue of the journal "The Accounting Review." This article was an attribute an article by the author published in the July 1958 issue of the journal, on the treatment of the problem of income determination during periods of changing price levels. However, the author believes that there has been a critical difference between his and Ridilla's application of this idea. The author states that he would pass into current economic income all improvement occurring during the fiscal period, regardless of whether such improvement was realized through the revenue cycle. On the contrary, Ridilla would retain the realization concept but would, through the balance sheet approach, effect a charge to income for depreciation of fixed assets based on their current replacement value and would, as a corollary, effect a credit to income for any long-term indebtedness redeemed during the year. The author submits that Ridilla's emphatic and unequivocal conclusion is unwarranted, only by the presumption of the validity and applicability of the realization concept and not by any basic rule of reason.

None of the foregoing represents the ultimate answer to this Herculean problem; nevertheless, I am anxious' to avoid having this universally significant issue resolved without a full, fair and objective examination. The problem is one which should have the thoughtful consideration of all sections of our society. The independent, professional accountant, who professes an obligation to the public at large (and not to his client alone) must, in my opinion, contribute his special knowledge and skills in the fields of accounting and taxation, so that a solution which is in the best interests of society as a whole (as distinguished from a solution favoring but a single segment thereof) will have been ultimately wrought.

We extend the model of risk sharing with limited commitment by introducing both a public and a private (unobservable and/or non-contractible) storage technology. Positive public storage relaxes future participation constraints, hence it can improve risk sharing, contrary to the case where hidden income or effort is the deep friction. The characteristics of constrained-efficient allocations crucially depend on the storage technology’s return. At the steady state, if the return on storage is (i) moderately high, both assets and the consumption distribution may remain time-varying; (ii) sufficiently high, assets converge almost surely to a constant and the consumption distribution is time-invariant; (iii) equal to agents’ discount rate, perfect risk sharing is self-enforcing. Agents never have an incentive to use their private storage technology, i.e. Euler inequalities are always satisfied, at the constrained-efficient allocation of our model, while this is not the case without optimal public asset accumulation. Finally, we find that, in contrast with the limited-commitment model without storage, past income affects consumption growth negatively both in our model with storage and in data from Indian villages.