Reviews the book "Profit Measurement and Price Changes," by K. Lacey.

Most of the everyday problems which plague practicing accountants in the realm of inventory accounting are somewhat divorced from the theory of inventory valuation and its inevitable relationship to income determination. Any accountant worth his salt has learned long ago to shy away from the word "value." The "value" of something implies its worth, and one doesn't have to be a timid soul to shudder at the insuperable problems which surround an attempt to determine the worth of anything. Value theory tells that such inventories must be worth the present discounted amount of the net receipts which will ultimately flow into the business as a result of their sale. The barrier which stands between value theory and the accounting treatment of inventories is essentially the realization convention. When a sale takes place, or where production under a fixed contract occurs, or where production of goods which sell on an organized market at given prices is completed in all these cases the accountant is willing to grant that the evidence is satisfactory.

This article has attempted to establish the position that the significance of business income for corporate reporting lies primarily in its usefulness as a measure of corporate performance in diverting a stream of resources from the economy, and that it should be developed primarily to serve this function. It has been shown that concepts of income which will best serve as a tax base, as a factor in rate regulation, as an element of national income estimates, and as a basis for managerial decisions are all dependent upon specialized and divergent factors which are related to a variety of objectives. Each of these uses constitutes a special purpose problem by itself. As was suggested at the beginning of the discussion, an acceptance of this thesis is merely a prelude to the major work of deciding upon the business income concept and the means of measuring income so conceived which will best serve this basic need. The prelude in this case, however, should not be written after the major score is completed. Until an area of agreement is reached as to the purpose to be served by the measurement of business income the discussion of the business income problem proceeds in a vacuum.