The Accounting Review Vol. 44 No. 2 1969
The Capital Maintenance Rule and the Net Asset Valuation Rule.
Abstract
This article focuses on capital maintenance rule and the net asset valuation rule. Coming to a consensus concerning the best method of measuring the periodic income of a firm has been found very difficult by accounting theorists. No one has been able to offer compelling evidence that his concept of income measurement is superior to competing proposals. One of the important preoccupations of accountants and users of accounting information is whether the capital of the entity, however defined, has been maintained. Income for a period is generally considered to be a residual earned only if the initial capital of the period has been maintained. The net asset valuation rule determines the timing of income recognition and, therefore, is equivalent to the matching and realization rule. For example, replacement cost accounting can be viewed either as a method of measuring the net assets of the firm or alternatively as a method of recognizing income, holding gains and losses are recognized earlier than under historical cost accounting, and revenue-expense matching, revenues are matched with current costs.
- DOI
- 10.2308/tar-4486615
- Volume
- 44
- Issue
- 2
- Pages
- 304-316
- Language
- en
- Sources
- openalex crossref