On the Use of the Economic Concept of Human Capital in Financial Statements.

Baruch Lev; Aba Schwartz

doi:10.2308/tar-4482514

On the Use of the Economic Concept of Human Capital in Financial Statements.

¹ Chairman of the Department of Business Administration, The Hebrew University of Jerusalem. 1 · ² Visiting Assistant Professor of Accounting and Finance, University of Chicago. 2 · ³ Lecturer in Economics, University of Tel-Aviv, Israel. 3

The Accounting Review 1971

Abstract The dichotomy in accounting between human and nonhuman capital is fundamental, the latter is recognized as an asset and therefore is recorded in the books and reported in the financial statement, whereas the former is totally ignored by accountants. Most economists, on the other hand, have a different view on this issue. The definition of wealth as a source of in come inevitably leads to the recognition of human capital as one of several forms of holding wealth, such as money, securities, and physical, nonhuman, capital. This attitude toward human capital has a broad range of applications in economics. The objective of this article is to provide a practical measurement procedure by which some of the contradictory views given be economists on this issue could be clarified. Specifically, the possibility of using the economic concept and measurement of human capital in financial statements is explored. It is also shown that the suggested method provides decision makers with information about organizational matters hitherto not reported by accountants.

DOI: 10.2308/tar-4482514
Volume: 46 (1)
Pages: 103-112
Language: en
Export: BibTeX
Sources: crossref openalex