It is becoming increasingly difficult to discuss the concept of realization intelligibly. The Concepts and Standards Research Study Committee report does not conform to current practice. Current practice recognizes some unrealized elements and rejects other unrealized elements that can be measured with equal objectivity. In practice realization may be a rather imprecise descriptive term that is generally understood, but clearly it is not a crucial criterion in the recognition of changes in assets and liabilities. The author's own view is that in establishing criteria for the recognition of revenues the concept of realization is awkward, causing confusion rather than creating clarity. It is doubtful that the concept can be described to include all the revenues that belong in the measurement of periodic income and to exclude all others. The concept may be useful in reference to nor revenue changes in assets and liabilities, that are, in distinguishing between realized and unrealized holding gains and loss In this regard, however, perhaps an exchange transaction involving objectively measurable assets would suffice.

This article explores the business entity concept of the 1964 Concepts and Standards Research Committee of the American Accounting Association and its significance to accounting. The committee's study of the business entity concept has caused it to depart significantly from the concise statement of the concept contained in the 1957 Revision. The committee believes that in referring to concepts underlying the conventions of accounting the use of the term business is inappropriately restrictive. The committee suggests that, in accounting, the term entity concept be used. In accounting the entity with which one is concerned may be defined as an area of economic interest to a particular individual or group. The boundaries of such an economic entity are identifiable by determining the interested individual or group, and by determining the nature of that individual's or that group's interest. An economic entity encompasses the activities, events, and utilization of resources that affect the interest of the individual or group. Simply stated, the committee advocates a user-oriented approach in defining an entity. That is, accounting reports about entities are developed to meet the needs of particular individuals or groups.