The Accounting Review Vol. 41 No. 3 1966
Alternative Asset Flow Concepts.
Abstract
The article focuses on the relationship between several asset flow concepts and their potential uses. The concepts discussed in this article are earnings, the working capital concept of funds flow from operations, the net quick asset version of funds flow from operations, and a literal cash flow from operations. From the study conducted, it is concluded that the value of an asset flow concept depends upon its relevance to the problems facing decision makers and on the accuracy and uniformity with which it is applied. Accounting practices include many examples of rejection of a relevant concept in favor of a less relevant one for the sake of accuracy and objectivity in the necessary measurements. The "cost principle" is the most prominent example of this priority arrangement. Similarly, when choosing an asset flow concept for reporting to investors, or for reporting to management, the accountant may not choose the most relevant concept if it is too difficult to apply. It is found that no one asset flow concept is most relevant to all decisions commonly made by readers of financial statements.
- DOI
- 10.2308/tar-4515796
- Volume
- 41
- Issue
- 3
- Pages
- 397-412
- Language
- en
- Sources
- openalex crossref