In this article the authors comment on an article related to placement of taxes in income statement, which was published in an earlier issue of the journal "The Accounting Review," as of January 1946. There are several kinds of revenue deductions which are nonetheless broadly in the same pew when it comes to the over-all calculation of net corporate income. First of the three classes of deductions is cost, in the sense of goods and services definitely consumed in the process of production. Second is losses, in the sense of outlays of one sort or another which have lost all significance so far as future operations are concerned, even though not having made any recognizable contribution in the past operations and last is taxes, which is payments to governmental units as computed on various bases and representing services only in the vague general sense in which government makes a contribution to the carrying on of the particular business enterprise. All of these classes of deductions are in the same boat when it comes to the question of determining profits.

The article presents a report of the executive committee of the journal The American Review on general concepts and standards of accounting. The charge of the committee was to consider and to advise the Executive Committee through the Director of Research, what subjects should be reviewed and studied by task-groups of the Association in the preparation of statements supplementary to Accounting and Reporting Standards for Corporate Financial Statements. The committee has considered an extensive list of specific accounting problems. But this has led to the conclusion that the greatest need would be served by study and clarification of six underlying accounting concepts: business entity, the matching concept, realization, materiality, consistency and objectivity. According to a research report, the idea that the existence of a distinct business entity is something, which the accountant universally assumes, is not a current innovation; but its importance has recently been stressed. The concept of matching costs and related revenues in the determination of periodic income is firmly embedded in accounting literature and in accounting practice.