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Current Cash Equivalent, Additivity, and Financial Action.

Kermit Larson¹; R. W. Schattke²

¹ Assistant Professor of Accounting, University of Texas. 1 · ² Associate Professor of Accounting, University of Colorado 2

Abstract The article criticizes a work of R. J. Chambers that provides an outstanding and provocative contribution to the development of accounting theory. The criticism involves a brief review of the relevant parts of Chambers' system, a technical discussion of the requirement of additivity in measurement, a discussion of whether Chambers' chosen property fits this technical requirement, and a more general discussion of the implications of the criticism. The authors conclude, for two reasons, that current cash equivalent is a nonadditive property. First, it is nonadditive because summation of the realizable prices of individual assets presumes independent sales of those assets and therefore does not involve a mode of combination. Second, it allows the independent sale of assets as a mode of combination and proceeds to question its possible artificiality

DOI

10.2308/tar-4508305

Volume

41 (4)

Pages

634-641

Language

en

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